Gerald C. Fox Foundation v. Fox CA1/5

Filed 3/6/23 Gerald C. Fox Foundation v. Fox CA1/5
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FIVE
GERALD C. FOX FOUNDATION, et
al., A165821
Plaintiffs and Respondents, (Santa Clara County
v. Super. Ct. No. 18PR182796)
RICHARD B. FOX,
Defendant and Appellant.
Richard B. Fox appeals following judgment against him on a claim
brought pursuant to the Elder Abuse and Dependent Adult Civil Protection
Act (Welf. & Inst. Code, § 15600 et seq.; Elder Abuse Act).1 We affirm.
All undesignated section references are to the Welfare and
1
Institutions Code.
1
FACTUAL BACKGROUND2
Richard B. Fox, David K. Fox, and the late Gerald “Jerry” C. Fox were
brothers, sons of Bill C. “B.C.” Fox.3 Charles Fox and Allison Greene are
David’s children. The Gerald C. Fox Foundation (Foundation) is a Minnesota
nonprofit corporation that makes distributions to charities selected by Jerry.
Jerry had lifelong issues regarding his mental capacity. In 2011, Jerry
executed the Gerald C. Fox Trust (Trust), transferring certain property to the
Trust and naming Richard as sole trustee. As originally established, the
Trust provided that income from the Trust property was to be distributed to
Jerry during his lifetime, along with any principal necessary to provide for
his needs. Upon his death, certain Trust property would be distributed to
David’s children and the balance to the Foundation.4
After executing the Trust, Jerry moved from Minnesota to California,
where Richard and his family provided care for Jerry. Richard managed all
aspects of Jerry’s life and paid for Jerry’s expenses from the Trust or from
Jerry’s personal property. Starting in early September 2017, Jerry was
hospitalized nearly continuously, required a breathing apparatus and feeding
tube, and suffered impaired cognitive function. In early October, Richard
presented Jerry with an amendment to the Trust (Amendment), changing the
specific bequests to David’s children, adding a new bequest to David’s wife,
and providing for the distribution of half the remaining Trust property to
himself and his son and the other half to the Foundation. Richard said or
2 We recite only the background facts relevant to this appeal.
3 For convenience, we will refer to all members of the Fox family by
their first names or nicknames. No disrespect is intended.
4A 2013 amendment to the Trust did not change the distribution of
Trust property upon Jerry’s death.
2
implied that Jerry could not come home to Richard’s house from the hospital
unless he signed the Amendment, which he did. Jerry died six days later.
PROCEDURAL BACKGROUND
In February 2018, the operative amended probate petition was filed by
the Foundation and David’s children (collectively, Petitioners). The petition
seeks to invalidate the Amendment, order Richard to provide an inventory
and accounting, and remove Richard as trustee. The petition also alleges
Richard committed financial elder abuse against Jerry.
In his verified response, Richard challenged the petition’s allegations
that the Amendment was invalid and that he should be removed as trustee.
In September 2019, on the eve of trial, Richard stipulated the Amendment
was invalid, agreed to step down as trustee, and agreed to provide an
inventory and accounting.
Following a four-day bench trial, the trial court issued a statement of
decision finding Richard committed elder abuse and awarding Petitioners
attorney fees and costs under the Elder Abuse Act. The court voided the
Amendment and rejected Richard’s contention that the Trust was also
invalid. Richard filed a motion for a new trial which the trial court denied in
a detailed written order. This appeal followed.5
DISCUSSION
I. The Elder Abuse Act
“The Legislature recognizes that elders are a class of persons who are
particularly vulnerable to abuse and that ‘this state has a responsibility to
protect’ them. (§ 15600, subd. (a); [citation].)” (Mahan v. Charles W. Chan
5This matter was transferred by California Supreme Court Order on
August 9, 2022 from the Sixth Appellate District (No. H048212) to the First
Appellate District.
3
Ins. Agency, Inc. (2017) 14 Cal.App.5th 841, 858 (Mahan).) “The Legislature
enacted the [Elder Abuse] Act to protect elders by providing enhanced
remedies to encourage private civil enforcement of laws against elder abuse
and neglect. [Citation.] An elder is defined as ‘any person residing in this
state, 65 years of age or older.’ (§ 15610.27.) The proscribed conduct includes
financial abuse. The financial abuse provisions are, in part, premised on the
Legislature’s belief that in addition to being subject to the general rules of
contract, financial agreements entered into by elders should be subject to
special scrutiny.” (Bounds v. Superior Court (2014) 229 Cal.App.4th 468, 478
(Bounds).)
II. Standing
Richard contends Petitioners lack standing under the Elder Abuse Act
because they did not file a statutorily required declaration at the
commencement of proceedings. We reject the challenge.
Section 15657.3 provides, “after the death of the elder or dependent
adult, the right to commence or maintain an action shall pass to the personal
representative of the decedent. If there is no personal representative, the
right to commence or maintain an action shall pass to any of the following, if
the requirements of Section 377.32 of the Code of Civil Procedure are met: [¶]
(A) An intestate heir whose interest is affected by the action. [¶] (B) The
decedent’s successor in interest .... [¶] (C) An interested person....”
(§ 15657.3, subd. (d)(1).)6 The statute thus “delineates who has standing to
bring an elder abuse lawsuit after the death of an elder or dependent adult.”
(Estate of Lowrie (2004) 118 Cal.App.4th 220, 227.)
6 We grant Richard’s unopposed March 25, 2022 request for judicial
notice of legislative committee reports regarding the subsequently enacted
bill adding this provision. (Stats. 2007, ch. 48, § 1.)
4
Code of Civil Procedure section 377.32 (hereafter, CCP § 377.32),
referenced in section 15657.3, is part of a statutory scheme governing the
procedure for asserting or maintaining a cause of action belonging to a
decedent. (See Code Civ. Proc., § 377.35.) CCP § 377.32 provides, “The
person who seeks to commence an action or proceeding or to continue a
pending action or proceeding as the decedent’s successor in interest under
this article, shall execute and file an affidavit or a declaration under penalty
of perjury under the laws of this state” making specified averments. (CCP
§ 377.32, subd. (a).)
Petitioners did not file a CCP § 377.32 affidavit at any time before or
during trial. Richard did not raise the issue until his new trial motion, which
argued Petitioners lacked standing to assert the Elder Abuse Act claim
because of their failure to file a CCP § 377.32 affidavit. With their opposition
to Richard’s new trial motion, Petitioners filed a CCP § 377.32 affidavit.7 In
its order denying Richard’s new trial motion, the trial court found Petitioners
did not lack standing.
As an initial matter, Petitioners are interested persons within the
meaning of section 15657.3. The statute provides “interested person” is
“defined in Section 48 of the Probate Code,” with exceptions not relevant
here. (§ 15657.3, subd. (d)(1)(C).) Probate Code section 48, in turn, defines
7 One of the statements to be included in the CCP § 377.32 affidavit is
“ ‘No proceeding is now pending in California for administration of the
decedent’s estate.’ ” (CCP § 377.32, subd. (a)(3).) Petitioners’ affidavit
provided, “At the time of the commencement of this action and through trial,
no proceeding was pending in California for administration of Jerry’s estate.
Following trial in this matter, the Foundation filed a Petition seeking to have
an administrator appointed for Jerry’s estate. ... [A]s of the date of this
declaration, no personal representative or administrator has been appointed
for the estate.”
5
“interested person” to include “any ... person having a property right in or
claim against a trust estate or the estate of a decedent which may be affected
by the proceeding.” Richard’s cursory contention that Petitioners are not
interested persons because they have no interest in Jerry’s personal estate,
but only in the Trust, fails to explain why this matters in light of the
statutory inclusion of persons “having a property right in or claim against a
trust estate or the estate of a decedent which may be affected by the
proceeding.” (Prob. Code, § 48, italics added.) Moreover, because the
challenged Amendment changed the Trust’s bequest to each of the
Petitioners, each respondent’s property right in or claim against the Trust
estate may be affected by the proceeding. (Cf. Lickter v. Lickter (2010)
189 Cal.App.4th 712, 729–730 [beneficiaries of decedent’s trust lacked
standing to pursue Elder Abuse Act claim because their bequest would not
change regardless of the outcome of the proceedings].)
Richard’s primary argument focuses on Petitioners’ failure to file a CCP
§ 377.32 affidavit at the commencement of the proceedings. Among other
issues, the parties dispute whether the CCP § 337.32 affidavit requirement is
necessary to confer standing or only affects a party’s capacity to sue. “ ‘There
is a difference between the capacity to sue, which is the right to come into
court, and the standing to sue, which is the right to relief in court.’
[Citation.] ‘Incapacity is merely a legal disability, such as infancy or
insanity, which deprives a party of the right to come into court. The right to
relief, on the other hand, goes to the existence of a cause of action. It is not a
plea in abatement, as is lack of capacity to sue.’ ”8 (Color-Vue, Inc. v. Abrams
8 “ ‘At common law a number of special pleas in abatement ... were
made preliminarily as separate pleadings prior to both the demurrer and
pleas in bar. A plea in abatement did not challenge the plaintiff’s claim on
the merits but merely objected to the particular proceeding to enforce it. The
6
(1996) 44 Cal.App.4th 1599, 1604, fns. omitted (Color-Vue).) “A plaintiff lacks
standing to sue if, for example, it is not a real party in interest.” (Id. at
p. 1604, fn.4.)
The distinction between standing and capacity is critical because “a
plea in abatement such as lack of capacity to sue ‘must be raised by
defendant at the earliest opportunity or it is waived.... The proper time to
raise a plea in abatement is in the original answer or by demurrer at the time
of the answer. [Citation.] It is a technical objection and must be pleaded
specifically. Thus an affirmative defense or demurrer which contains a
general assertion that plaintiff has not stated a cause of action does not
suffice to raise a plea in abatement. [Citations].’ [Citations.] Lack of
standing, by contrast, is not waived by failure to timely object.” (Color-Vue,
supra, 44 Cal.App.4th at p. 1604.)
Cases considering the application of CCP § 377.32 in contexts other
than Elder Abuse Act claims have indicated the affidavit is not necessary to
establish standing, holding the statute “ ‘does not require that the affidavit
be filed as a condition precedent to commencing or continuing the action.’
[Citation.] Instead, at most, ‘failure to file the affidavit could possibly subject
the action to a plea in abatement.’ ” (Aghaian v. Minassian (2021)
64 Cal.App.5th 603, 614; see id. at pp. 613–614 [rejecting argument, first
raised more than two years after original complaint was filed, that the
plaintiffs’ failure to file CCP § 377.32 declaration with their original
complaint meant the plaintiffs lacked standing until the declaration was filed
with a subsequent amended complaint]; accord, Parsons v. Tickner (1995)
code system abolished the separate pleading but allowed the same kind of
objections to be raised by demurrer or answer.’ ” (The Rossdale Group, LLC
v. Walton (2017) 12 Cal.App.5th 936, 942.)
7
31 Cal.App.4th 1513, 1523–1524 [the plaintiff’s failure to file CCP § 377.32
declaration did not bar her from pursuing action as successor in interest].)
We see no reason to construe the CCP § 377.32 declaration requirement
differently for purposes of Elder Abuse Act claims; to the contrary, we see
every reason to construe it the same. “The prerequisites for standing to
assert statutorily based causes of action are determined from the statutory
language, as well as the underlying legislative intent and the purpose of the
statute.” (Boorstein v. CBS Interactive, Inc. (2013) 222 Cal.App.4th 456, 466.)
“ ‘The purpose of the [Elder Abuse Act] is essentially to protect a particularly
vulnerable portion of the population from gross mistreatment in the form of
abuse and custodial neglect.’ ” (Estate of Lowrie, supra, 118 Cal.App.4th at
p. 226.) The Legislature expressly provided that the portion of the Elder
Abuse Act containing section 15657.3 was enacted “to enable interested
persons to engage attorneys to take up the cause of abused elderly persons
and dependent adults.” (§ 15600, subd. (j).) “This statement of legislative
intent suggests the Legislature intended a broad definition of standing in the
context of elder abuse cases.” (Estate of Lowrie, at p. 227.) Thus, “[s]tanding,
for purposes of the Elder Abuse Act, must be analyzed in a manner that
induces interested persons to report elder abuse and to file lawsuits against
elder abuse and neglect. In this way, the victimized will be protected.” (Id.
at p. 230; see also ibid. [“Any definition given to Welfare and Institutions
Code section 15657.3, subdivision (d) must be sufficiently elastic to fulfill the
purposes of the Elder Abuse Act.”].)
Accordingly, we construe section 15657.3, consistent with the purposes
of the Elder Abuse Act, such that the CCP § 377.32 declaration requirement
is a question of capacity to sue, not standing to sue, and must be raised at the
8
earliest opportunity or be waived. Because Richard waived the issue by
failing to raise it earlier, the challenge fails.9
III. Deprivation of a Property Right
Richard argues the Amendment did not constitute a taking or the
deprivation of a property right under section 15610.30 because it was
revocable and did not take effect during Jerry’s lifetime. We disagree.
Financial abuse of an elder occurs when a person “Takes, secretes,
appropriates, obtains, or retains real or personal property of an elder or
dependent adult” for wrongful use, with intent to defraud, or by undue
influence. (§ 15610.30, subd. (a).) The statute further provides, “a person or
entity takes, secretes, appropriates, obtains, or retains real or personal
property when an elder or dependent adult is deprived of any property right,
including by means of an agreement, donative transfer, or testamentary
bequest, regardless of whether the property is held directly or by a
9We need not and do not decide whether, as the parties dispute, the
CCP § 377.32 declaration requirement for purposes of section 15657.3 applies
only to successors in interest or also applies to intestate heirs and interested
persons.
Richard raises a separate, additional challenge with respect to the
Foundation. He disavows any challenge to the Foundation’s standing, but
instead challenges the standing of David and a former member of the
Foundation’s board of directors, Jay Johnson, to bring claims on behalf of the
Foundation. Assuming the challenge has been preserved, it fails. The
Foundation asserted the claims in the operative amended petition on its own
behalf; neither David, Johnson, nor any other representative of the
Foundation is a party and therefore their standing is not at issue. Richard’s
reliance on a case involving individual and derivative claims brought by a
corporation’s director is therefore unavailing. (Turner v. Victoria (2021)
67 Cal.App.5th 1099, 1114, review granted Nov. 10, 2021, S271054.) We
deny as irrelevant Petitioners’ January 18, 2022 request for judicial notice of
documents related to whether Richard is collaterally estopped from
challenging the Foundation’s standing, an issue we need not decide.
9
representative of an elder or dependent adult.” (Id., subd. (c).) “The text of
section 15610.30 is broad.” (Mahan, supra, 14 Cal.App.5th at p. 861.)
Richard argues the statute requires property be taken from the victim
during the victim’s lifetime, relying on Quiroz v. Seventh Ave. Center (2006)
140 Cal.App.4th 1256 and Carter v. Prime Healthcare Paradise Valley LLC
(2011) 198 Cal.App.4th 396. The issue in Quiroz was whether an untimely
Elder Abuse Act cause of action brought by a survivor related back to a
timely filed wrongful death cause of action. (Quiroz, at p. 1262.) Richard
relies on the following statement in the court’s overview of the two types of
claims: “a survivor cause of action [including a survivor claim under the Elder
Abuse Act] is not a new cause of action that vests in the heirs on the death of
the decedent. It is instead a separate and distinct cause of action which
belonged to the decedent before death but, by statute, survives that event.”
(Id. at p. 1264.) Carter involved an Elder Abuse Act neglect claim against
medical facilities treating the decedent before his death. (Carter, at pp. 401–
402.) The court held allegations about the facilities’ conduct following the
decedent’s death to cover up their alleged neglect did not support an Elder
Abuse Act claim because, although this conduct might have injured the
plaintiffs (the decedent’s children), “in this survivors’ action for elder abuse,
only the injury that [the decedent] suffered before death matters.” (Id. at
p. 409.)
We agree that a decedent must be injured before death for an Elder
Abuse Act claim, however, it is the Elder Abuse Act that defines what
constitutes an injury for such a claim. The plain language of the statute does
not require property be transferred during the elder’s lifetime. The statute
expressly provides deprivation of property may be made “by means of ...
donative transfer, or testamentary bequest.” (§ 15610.30, subd. (c).) “[T]he
10
phrases ‘donative transfer’ and ‘testamentary bequest’ refer not only to
consummated transfers, but also to prospective transfers. [¶] A donative
transfer is a gratuitous transaction. It can be inter vivos or testamentary. ...
A testamentary bequest (which is also a gratuitous transaction absent a
contract to make a will) is merely an inchoate expectation on the part of the
beneficiary because ‘[i]n California, a will is generally revocable by the
testator at any time and for any reason prior to [the testator’s] death.’
[Citation.] [¶] Thus, in the context of [§ 15610.30], the phrases ‘donative
transfer’ and ‘testamentary bequest’ refer both to transactions that have been
performed (the gift has been delivered and the testamentary bequest has
taken effect) and to transactions that have not yet been performed (a promise
to make a gift and a testamentary bequest has been made but the testator
has not died).” (Bounds, supra, 229 Cal.App.4th at pp. 481–482.)
Moreover, “Case law recognizes that property rights are a complex
‘ “bundle of rights.” ’ [Citation.] That bundle includes the ‘ “rights to possess
the property, to use the property, to exclude others from the property, and to
dispose of the property by sale or by gift.’ ” (Bounds, supra, 229 Cal.App.4th
at p.479, first italics omitted.) This understanding is reflected in the
legislative history of the amendments adding the definition in subdivision (c)
set forth above. A committee analysis provided an example of conduct
covered by the law: when an elder is “pressured by a family member to
change the terms of a will,” then “the elder is unknowingly deprived of [the
elder’s] property.” (Sen. Com. on Judiciary, Analysis of Sen. Bill No. 1140
(2007–2008 Reg. Sess.) as amended Mar. 10, 2008, p. 4.) Richard’s assertion
that only irrevocable testamentary bequests constitute a deprivation of
property is not supported by the statute’s plain language. To so construe the
statute “ ‘would violate the cardinal rule that courts may not add provisions
11
to a statute.’ ” (Los Angeles County Metropolitan Transportation Authority v.
Alameda Produce Market, LLC (2011) 52 Cal.4th 1100, 1108.) Moreover,
such a construction would allow abusers to effect deathbed changes to wills or
trusts as long as the changes were technically revocable, a result entirely
inconsistent with the purposes of the statute.
Accordingly, the Amendment constituted a deprivation of property
under the Elder Abuse Act despite being revocable and having no effect
during Jerry’s lifetime.
IV. Richard’s Undue Influence Challenge to the Trust
The trial court rejected Richard’s contention that the 2011 Trust was
invalid because it was the result of undue influence exerted by B.C. On
appeal, Richard asserts the court’s rejection was based solely on the ground of
estoppel and argues he was not estopped from asserting the claim. In fact,
the court also found the claim was not pled. In any event, “it is a settled
appellate principle that if a judgment is correct on any theory, the appellate
court will affirm it regardless of the trial court’s reasoning.” (Young v.
California Fish and Game Commission (2018) 24 Cal.App.5th 1178, 1192–
1193.)
Richard’s response to the petition alleged, “if undue influence in this
case means that others prepared [Jerry’s] trust and foundation documents in
2011 to serve their own interests, ... then the 2011 trust and foundation
executions are no more valid than the execution of the ... Amendment in
2017.” “Under the usual rules of pleading, [a defendant] may raise
affirmative defenses in its answer ... , but may not seek affirmative relief
(Code Civ. Proc., § 431.30, subd. (c)).” (City of Stockton v. Superior Court
(2007) 42 Cal.4th 730, 745–746; see Code Civ. Proc., § 431.30, subd. (c)
[“Affirmative relief may not be claimed in the answer.”].) “ ‘Affirmative relief’
12
is an award, such as damages, that goes beyond merely defeating the
plaintiff’s recovery.” (City of Stockton, at p. 746, fn. 12.) Richard argues he
did not seek affirmative relief on his undue influence claim. To the contrary,
the prayer for relief in his response sought the following, “If the court finds
the [Amendment] is invalid, the court should also order that the provisions of
the Gerald C. Fox Trust of August 23, 2011 and the provisions dated
August 23, 2011 which amend the Gerald C. Fox Foundation are invalid ....”10
Accordingly, Richard’s claim that the Trust was invalid because of
undue influence was improperly pled. We need not decide whether Richard
was also estopped from asserting the claim.
DISPOSITION
The judgment is affirmed. Petitioners are awarded their costs on
appeal.
10 Richard’s response to the petition alleged, immediately following the
paragraph alleging undue influence, “If both the 2011 and 2017 executions
are deemed invalid, then the estate of [Jerry], an unmarried man with no will
and no issue or living parents, should pass by intestate succession under
Probate Code § 6402(c) to his only living siblings, half to Richard and half to
David.” At the beginning of the bench trial, Richard’s counsel confirmed that
one of his arguments would be the Trust was invalid and therefore Jerry’s
estate should be distributed equally between Richard and David.
13
SIMONS, Acting P.J.
We concur.
BURNS, J.
WISEMAN, J.*
(A165821)
* Retired Associate Justice of the Court of Appeal, Fifth Appellate
District, assigned by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
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