Gerritsen v. Gerritsen CA2/1

Filed 3/23/21 Gerritsen v. Gerritsen CA2/1
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
GREGORY GERRITSEN, B300712
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BP152429)
v.
ALFONSO GERRITSEN, as
Trustee, etc.,
Defendant and Respondent.
APPEAL from an order of the Superior Court of Los
Angeles County, Clifford Klein, Judge. Affirmed.
Musick, Peeler & Garrett, Richard S. Conn and Cheryl A.
Orr for Plaintiff and Appellant.
Hart, Mieras & Morris, Tulane M. Peterson and Gary W.
Morris for Defendant and Respondent.
______________________
This appeal arises from a dispute between two brothers,
appellant Gregory Gerritsen and respondent Alfonso Gerritsen,
relating to their respective percentages of ownership in Gerritsen
Enterprises (the Business) following the death of their mother,
Margarita Gerritsen. Margarita was the founder of the Business.
Her third child, Yoloxochilt Gerritsen, is not a party to the
appeal. For ease of reference, we will refer to the family
members by their first names.
In a statement of decision filed June 24, 2019, the probate
court found that at the time of Margarita’s death, the Margarita
Gerritsen Living Trust dated August 19, 1998, as amended on
April 26, 2006, and July 8, 2011 (the Trust), owned 49 percent of
the Business; Alfonso owned 48 percent; and Gregory owned 3
percent. Gregory argues this finding is not supported by
substantial evidence. He contends the probate court erred in
admitting certain testimony and documents at variance with the
terms of the Business’s partnership agreement; failed to apply
case law that would have required equal division of the Business
between Alfonso and Gregory; and failed to find the Business was
a sole proprietorship, owned 100 percent by the Trust.
We find no error, and therefore, we affirm.
BACKGROUND
A. The Issue Before the Probate Court
Margarita died on May 17, 2013. On May 30, 2014,
Gregory filed a petition in probate court to compel Alfonso, as
trustee of the Trust, to account, initiating this matter. On
October 3, 2014, Alfonso petitioned the probate court to
determine, among other things, “the rightful owners and
percentages of ownership of [the Business].” Alfonso argued that
as reflected in the Business’s tax returns, Schedule K-1 filings, at
2
the time of Margarita’s death, the Business was owned 49
percent by the Trust, 48 percent by Alfonso, and 3 percent by
Gregory. According to Alfonso, based on a provision in the second
amendment to the Trust that bequeathed half of the Trust’s
interest each to Alfonso and Gregory, following Margarita’s
death, Alfonso owned 72.5 percent of the Business, and Gregory
owned 27.5 percent.
On October 25, 2018, Gregory filed a petition in which he
sought to have the probate court confirm that he was a 50
percent owner of the Business. He maintained that Margarita
transferred her 100 percent interest in the Business to the Trust.
Accordingly, when Margarita died, he and Alfonso each owned a
50 percent share in the Business.
We summarize the evidence presented at trial below.
B. The Partnership Agreement
On July 1, 1985, Margarita, Alfonso, and Yoloxochilt
entered into a general partnership agreement forming the
Business for the purpose of “engag[ing] in the business of
Shaklee,” which involved the distribution of products such as
vitamins, face creams, and dietary supplements. According to
the partnership agreement, Margarita “shall be the majority
owner and managing partner of the partnership. She shall
initially contribute to the partnership as capital the amount of
$3,000.00 in cash.”
As to Alfonso’s and Yoloxochilt’s capital contributions, the
partnership agreement stated that they each “shall be a partner,
but shall not make any contribution in cash or property to the
initial capital of the partnership, and no amount shall be
contributed initially to his [or her] capital account. He [or she]
shall subsequently contribute services to the partnership, and his
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[or her] capital account shall be credited no more than 2 [percent]
of the partnership capital account. This credit to the capital
account shall be in the sole discretion of the managing partner,
[Margarita].”
Further, “[t]he partnership’s profits and losses shall be
shared by the partners in the same proportions as their initial
capital accounts bear to each other. . . . [¶] Distribution of
profits shall be in the sole discretion of the majority and
managing partner, [Margarita].”
As to Gregory, the agreement stated, “It is expressly
acknowledged and understood that all the partners agree to
admit the minor [Gregory], born [1975], into the partnership on
his 18th birthday. If the managing partner is still alive, she in
her sole discretion shall determine said [Gregory]’s initial
interest in the partnership.” The agreement included an
integration clause and required modifications to be in writing and
“signed by the party to be charged.”
The parties do not dispute that under the partnership
agreement, Margarita had complete authority over the allocation
of the Business’s profits among the partners and that the capital
account balances were to have no effect on the allocation of
profits.
C. Amendments to the Partnership Agreement and the
Trust
In 1993, Gregory became a partner in the Business.
Although a document was prepared to reflect his entry into the
partnership, no copy was retained. Gregory understood that
Margarita “had all the power, it was her business[,] and [they] all
abided by that.” He also understood that “the partnership
agreement itself allowed for allocation of profits without respect
4
to capital account balances or actual ownership of the Business,
and irrevocably vested in Margarita the power to allocate profits
on an annual basis.”
Upon his admission into the partnership, Gregory worked
for the Business part time. He “answer[ed] phones, ma[d]e
orders, [and] accompan[ied his] mother to meetings and
demonstrations.” In 2011, when Margarita became ill, he helped
organize business meetings.
On August 19, 1998, Margarita created the Trust. It
required that upon her death, 50 percent of her interest in the
Business would be allocated to Yoloxochilt; and 25 percent each
would be allocated to Alfonso and Gregory. Margarita executed
an assignment of her partnership interest to the Trust, which
stated, “Assignor hereby assigns all of her right, title and interest
as a general partner of [the Business], a general partnership,
including ___ [blank to be filled in] percent interest in and to the
profits, losses and distributions of said partnership.” The
assignment was signed by Margarita and her children, without
the blank space filled in. On October 15, 1998, the estate
planning firm returned the document to Margarita with a request
that she fill in the blank. She handwrote “100” in the blank
space.
On January 30, 2004, Margarita, Alfonso, Gregory, and
Yoloxochilt signed a writing that purported to reflect an
agreement reached in September 2003 under which Yoloxochilt
separated from the partnership. The 2003 Schedule K-1 for the
Business indicated Yoloxochilt’s ownership interest was 35
percent. Gregory testified that none of the partners discussed the
fact that Yoloxochilt was entitled to receive 35 percent of the
value of the Business. In contrast, Alfonso testified that
5
Yoloxochilt received an amount equal to 35 percent of the
Business, “[a]nd then some,” in the form of $50,000 and a car
worth approximately $50,000.
Margarita became ill with cancer in 2011. In May 2011,
she created typewritten notes in Spanish proposing changes to
the distribution of the Trust assets. Two English translations of
the notes were presented to the probate court. One translation
stated that “Gregory is the ½ owner of the [Business] after its
costs, promotions and taxes.” The second translation stated that
“Gregory will receive ½ the profits from the [Business].”
However, the second English version was modified by a
handwritten insertion to read, “Gregory will receive ½ of my
ownership interest in the profits from the [Business.]”
Margarita’s estate planning attorney, Gary Morris, met
with Margarita concerning the proposed changes, which would
culminate in the second amendment to her Trust. He testified
that Margarita told him she had a 49 percent ownership interest
in the Business and that she had given 48 percent to Alfonso.
Morris understood that Margarita made transfers of ownership in
the Business to her children to reflect the value of the work they
did. The second amendment did not expressly state that
Margarita’s interest was 49 percent because Morris assumed this
could change again.
Lisa Peterson used to work at the same firm as Morris.
Peterson was not present at the meeting with Margarita, but
recognized the handwritten phrase “of my ownership interest in”
on the second English translation as her own handwriting. She
did not remember making the handwritten notation. However,
because the notation did not include Morris’s initials after it, she
believed that she added the phrase on her own, and not pursuant
6
to instructions from Morris. She did not know whether
Margarita owned less than 100 percent of the Business; Peterson
included the phrase because it provided greater specificity.
On July 8, 2011, Margarita executed the second
amendment to the Trust. It states that “[o]ne-half (1/2) of
Trustor’s ownership interest in the [Business] shall be
distributed to [Gregory]. . . . Should [Gregory] . . . decide not to
work next to [Alfonso], it is Trustor’s desire that [Gregory] . . .
receive only twenty percent (20%) of the monthly profits. If
[Gregory] should decide to sell, transfer or exchange his interest
in the [Business], it is Trustor’s desire that [Alfonso] shall have
the right of first refusal to purchase such interest.” Further,
“[o]ne-half (1/2) of Trustor’s ownership interest in the [Business]
shall be distributed to [Alfonso].”
D. The Business’s Tax Returns
1. Schedule K-1 for Tax Years 2000-2013
The Business’s partnership tax returns for the years 2000
through 2013 each indicated that the Business was a general
partnership. The percentage of profits, losses, and ownership
capital reflected in box J1 of the Schedule K-1s for each partner,
were as follows:
1 The format of the Schedule K-1s provided to the probate
court changed in 2004. Between 2000 and 2003, the box referred
to here as box J was identified as box D.
7
Year Margarita Yoloxochilt Alfonso Gregory
2000 45 35 15 5
2001 40 35 20 5
2002 35 35 20 10
2003 35 35 20 10
2004 45 0 35 25
2005 45 0 35 25
2006 45 0 35 25
2007 45 0 35 20
2008 45 0 35 20
2009 48 0 46 6
2010 49 0 48 3
2011 49 0 48 3
2012 49 0 48 3
2013 49 0 48 3
The IRS instructions for partnership returns state that as
to box J, “[o]n the line for Capital, enter the percentage share of
the capital that the partner would receive if the partnership was
liquidated by the distribution of undivided interests in
partnership assets and liabilities. If the partner’s capital account
is negative or zero, express the percentage ownership of capital
as zero.”
2. Gregory’s Evidence
In 2008, Gregory advised his mother that he wanted the
amounts reported on the Business’s tax returns to be “honest”
and that what was being reported for him was “too high”
compared to what he was receiving. Thus, on the 2009 tax
return, his percentage of profits, losses and ownership of capital
8
dropped from 20 percent to 6 percent, and in 2010 and the
following years, it was reduced to 3 percent.
As a witness for Gregory, Yoloxochilt testified that while
she was a partner, she oversaw the preparation of the Business’s
tax returns. Although tax documents stated she previously
received 35 percent of the Business’s profits, she denied that she
was a 35 percent owner. Rather, Margarita controlled the
business and “could give out income or capital and withdraw it as
she saw fit.” Yoloxochilt testified that she felt that neither she,
Alfonso, nor Gregory were owners of the Business. However, in
verified filings with the probate court, Yoloxochilt stated that
Gregory and Alfonso “previously . . . were part owners of the
[B]usiness.”
3. Alfonso’s Evidence
Alfonso testified that the percentages listed on the tax
returns each year determined the profit share of the partners for
the following year. He had multiple discussions with Margarita
relating to the tax documents, in which she indicated that
Gregory was only a 3 percent partner because he was not
working in the Business. In contrast, Alfonso was given 48
percent because of the extensive work he performed for the
Business. Alfonso testified that he never heard his mother
discuss the concept of non-equity partners and always believed
himself to be a general partner in the Business.
Accountant Melinda Estrada’s firm had provided
accounting services for the Business for approximately 30 years.
Margarita told Estrada that Gregory’s percentage ownership was
3 percent.
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4. Accounting Experts
Gregory’s accounting expert, Brian Shapiro, testified that
the Business’s tax returns from 2000 to 2013 were not prepared
in a manner consistent with tax reporting requirements. For
example, the tax returns failed to report cash, included balance
sheets that were not balanced, intermittently reported a capital
account balance, and never reported cash disbursements. He
stated that, “just because you stick a capital account number on a
Schedule K-1 doesn’t make it so.” He also observed that for the
years 2004 through 2007, the total percentage of ownership
reported on the Schedule K-1s totaled 105 percent. Shapiro
opined that Margarita’s distribution of income, “ha[d] nothing to
do with capital. Capital in a partnership is defined by what’s in
the operating agreement. And for capital to change in a
partnership . . . either the equity has to be sold or . . . gifted. . . .
If someone is suggesting that you look at a [Schedule] K-1 and
whatever that [Schedule] K-1 says must be the way it is, . . . then
we got some real problems . . . because there is nothing on those
[Schedule K-1s] that is consistent with not only the prior year but
with . . . how the rules suggest that it is supposed to be reported.”
Anne Hayes, the certified public accountant retained by the
temporary trustee, Jeffrey Siegel, agreed there were several
problems with the tax returns. She had “no way of knowing with
certainty whether [the percentage allocations reflected in the
2010 to 2013 returns] were accurate or reliable. But based on . . .
the partnership agreement, which indicated that Margarita
retained 100 percent interest of the capital, of the equity interest,
and that no other partner was to receive more than 2 percent of
the equity, [she] found it difficult to understand how equity
would have been distributed to any of the other partners[.]”
10
According to Hayes, a partner could have unequal income
interests and equity interests in a partnership, such as a
nonequity partner in a law firm. Based upon her review of the
partnership agreement and tax returns as well as her
conversations with Gregory, Yoloxochilt, and Siegel, Hayes
concluded that the most prudent course of action for the 2017 tax
return was to report that the Trust owned 100 percent of the
Business.
Alfonso’s accounting expert, Donald Berkheimer, testified
that the phrase “capital” on the tax returns refers to ownership.
He opined that capital account balances on the tax returns did
not have to correspond with profit shares given to individual
partners. He acknowledged the partnership agreement provided
that no one other than Margarita could have more than 2 percent
credited to their capital account, but he concluded “there must
have been changes that weren’t documented.” He opined
Margarita did not own 100 percent of the Business in 1998,
observing that if Margarita had in fact transferred 100 percent of
the Business to her Trust on October 10, 1998, then it would have
been unnecessary to remove Yoloxochilt from the partnership in
2003. He also testified that for tax return purposes, it was not
possible to have a partnership with only one owner, which would
constitute a sole proprietorship.
E. Events After Margarita’s Death
After Margarita’s death, Alfonso, Gregory, and Yoloxochilt
met at Morris’s office to discuss the second amendment to the
Trust. During the meeting, Morris explained that until the Trust
was administered, Gregory did not have any right to control the
portion of the Business that was held by the Trust. Yoloxochilt
and Gregory disagreed, telling Morris that Gregory was a
11
partner. Both Yoloxochilt and Gregory testified that during the
meeting, Gregory pointed Morris to the tax returns as evidence of
his partnership.
Thereafter, Gregory sent a letter to Morris reasserting that
he was a partner in the Business, “exclusive of the [T]rust.” To
prove he was a partner, he appended documents to the letter,
including a fictious business name statement created on or prior
to August 28, 2008, which listed Gregory as an owner.
F. The Probate Court’s Findings
On June 24, 2019, following seven days of trial, the probate
court issued a 17-page statement of decision. The probate court
observed that, “[t]he resolution of this issue [concerning the
percentages of ownership] is an especially difficult one for the
court due to credibility issues with prior conduct by both
brothers, and the absence of any reliable documentary
corroboration for their respective positions. The court . . .
examined the evidence in its effort to determine the intent of . . .
Margarita . . . with the distribution of her interest in [the
Business]. The court finds by a preponderance of the evidence
that she did not transfer 100 percent of the ownership of [the
Business] into her [T]rust . . . .” Consistent with the 2010, 2011,
and 2012 tax returns, the court concluded that at the time of
Margarita’s death, the Trust owned 49 percent of the Business,
Alfonso owned 48 percent, and Gregory owned the remaining
3 percent.
Gregory timely appealed.
DISCUSSION
We review the probate court’s express and implied findings
of fact in its statement of decision for substantial evidence.
12
(Ermoian v. Desert Hospital (2007) 152 Cal.App.4th 475, 501.)
“Under the substantial evidence standard of review, our review
begins and ends with the determination as to whether, on the
entire record, there is substantial evidence, contradicted or
uncontradicted, which will support the trial court’s factual
determinations. [Citations.] Substantial evidence is evidence of
ponderable legal significance, reasonable in nature, credible, and
of solid value. [Citation.]” (Ibid.) In reviewing the sufficiency of
evidence, we also view all factual determinations in the light
most favorable to the prevailing party and in support of the
judgment. (Nestle v. City of Santa Monica (1972) 6 Cal.3d 920,
925.) “ ‘In brief, the appellate court ordinarily looks only at the
evidence supporting the successful party, and disregards the
contrary showing.’ [Citation.] All conflicts, therefore, must be
resolved in favor of the respondent. [Citation.]” (Id. at pp. 925-
926.)
A. There is No Dispute that Margarita Controlled
Distribution of Profits
In support of his argument that the Trust owned 100
percent of the Business, Gregory argues that under the
partnership agreement, Margarita possessed the right to 100
percent of the Business’s profits.
The parties agree that under the partnership agreement,
Margarita had complete authority over the allocation of the
Business’s profits among the partners. They also agree that the
capital account balances, which reflected ownership, were
separate from the allocation of profits, which could be allocated
without respect to capital account balances or actual ownership of
the Business. Accordingly, Margarita’s control over allocation of
13
the Business profits has limited value in determining the division
of ownership in the Business.
B. Substantial Evidence Supports the Trial Court’s
Findings
Substantial evidence supports the probate court’s
conclusion that the Trust owned 49 percent of the Business. In
determining the ownership interests, the probate court properly
sought to determine what percentage of the Business was held by
the Trust at the time of Margarita’s death. The Business’s 2010
and 2011 tax returns, which were filed in the years prior to her
death, help to inform this determination, and indicated the Trust
owned 49 percent of the Business. The Business’s 2012 tax
return also indicates the Trust owned 49 percent of the Business.
However, the tax preparer, Estrada, executed the 2012 tax return
in January 2014, eight months after Margarita passed away.
Accordingly, we do not rely on the 2012 tax return in our opinion.
The ownership percentages indicated on the tax returns
were corroborated by (1) Morris’s testimony that in 2011,
Margarita told him the Trust owned 49 percent of the Business
and Alfonso owned 48 percent; (2) Estrada’s testimony that
Margarita told her Gregory held a 3 percent ownership interest;
and (3) Alfonso’s testimony that his ownership percentage was 48
percent and Gregory’s was 3 percent. It is also noteworthy that
the tax returns for the years 2000 to 2009 reflected a reduced
ownership interest for Margarita, fluctuating between 35 to 45
percent, further supporting the inference that she owned less
than 100 percent of the business when she transferred her
interest to the Trust in 1998.
Gregory contends the tax returns were a sham. However,
in 2008 Gregory insisted that the tax returns should more
14
accurately reflect the income he received from the Business.
There is no evidence to indicate that he complained further after
his share of the profits, losses, and capital account was reduced to
6 percent in 2009, and to 3 percent in 2010. Admittedly, the tax
returns included miscalculations and inconsistencies.
Nonetheless, due to the limited written documentation available,
we cannot find the probate court erred when it concluded the tax
returns provided the most reliable evidence of the Business’s
ownership percentages.
The language used in the Trust documents further
supports the probate court’s finding. Although the Trust
documents do not specify the exact ownership interest held by
Margarita and assigned to the Trust, both the original 1998 trust
instrument and the 2011 second amendment bequeath only
Margarita’s “interest” in the Business. This phrase supports the
inference that Margarita did not own 100 percent of the
Business.
Moreover, the second amendment indicates that when it
was executed in 2011, Margarita understood that Alfonso had a
greater degree of participation in the Business than Gregory. It
contemplates a reduction in allocation of the profits if Gregory
did not work alongside Alfonso, and required that Alfonso receive
a right of first refusal if Gregory chose to sell his interest in the
Business. The second amendment does not include similar
contingencies for Gregory’s benefit.
Gregory points to the October 1998 assignment of
Margarita’s interest to the Trust in which she handwrote the
number “100” as evidence that Margarita transferred 100 percent
of the Business to the Trust. However, this document is easily
susceptible to a different interpretation if Margarita owned less
15
than 100 percent of the Business at that time. The inference that
she did not own 100 percent is supported by the Schedule K-1s
executed for tax years 2000 through 2003, in which Margarita’s
reported interest fluctuates between 35 to 45 percent, and
Yoloxochilt’s interest is reported as 35 percent. Margarita’s
reduced interest also is consistent with the documentation of
Yoloxochilt’s withdrawal from the partnership in 2003, and her
receipt of assets worth approximately $100,000.
Gregory notes the partnership agreement provided that
Margarita “shall be” the majority owner in the partnership and
that no other partner could have more than 2 percent of the
capital attributed to their capital account. He argues the probate
court’s finding fails to give effect to these provisions. Moreover,
he argues, the partnership agreement requires that any
modification to its terms be made in writing and signed by the
party charged. From this language, Gregory concludes that
without an executed writing evidencing a departure from these
terms, Margarita never could own less than 50 percent of the
Business and neither he nor Alfonso could own more than 2
percent. We are not persuaded.
In support of this argument, Gregory cites Civil Code
section 1698, which he describes as providing that a “written
agreement may only be modified by a written agreement.”
(Italics added.) To the contrary, Civil Code section 1698 does not
include the word “only.” Moreover, it provides that “[n]othing in
this section precludes in an appropriate case the application of
rules of law concerning estoppel, oral novation and substitution of
a new agreement, rescission of a written contract by an oral
agreement, waiver of a provision of a written contract, or oral
independent collateral contracts.” (Civ. Code, § 1698, subds. (a),
16
(d).) Appellate courts hold that a contract provision excluding
modification except by a signed writing does not prevent the
parties from modifying the terms of the contract by conduct
antithetical or wholly inconsistent with its terms. (See Diamond
Woodworks, Inc. v. Argonaut Ins. Co. (2003) 109 Cal.App.4th
1020, 1038; Biren v. Equality Emergency Medical Group, Inc.
(2002) 102 Cal.App.4th 125, 141 [“ ‘the parties may, by their
conduct, waive such a provision’ where evidence shows that was
their intent”].) Thus, implied in the probate court’s ruling is a
finding that the parties modified the partnership agreement
through their conduct. Gregory fails to demonstrate that the
probate court’s implied and express findings are not supported by
substantial evidence.
C. The Evidence Did Not Compel the Probate Court to
Find the Business Was a Sole Proprietorship
Gregory maintains the Business was a sole proprietorship
or that Margarita was the sole equity partner. This position is
untenable.
A partnership “means an association of two or more
persons to carry on as coowners a business for profit . . . .” (Corp.
Code, § 16101, subd. (a)(9).) Under such conditions, except in
certain circumstances not present here, a partnership is formed
“whether or not the persons intend to form a partnership.” (Corp.
Code, § 16202, subd. (a).)
Although Margarita’s control of the Business was
pervasive, this degree of control was defined in the partnership
agreement and is not a sufficient basis to find the Business was a
sole proprietorship. Every document presented to the probate
court identifies the Business as a general partnership. The
Schedule K-1s refer to Gregory as a general partner. Indeed,
17
Gregory vociferously insisted to Morris, following Margarita’s
death, that he was an existing partner in the Business, exclusive
of the Trust, and pointed to both the tax returns and other
government filings to support his position.2 Yoloxochilt also
identified Gregory as an “owner” in the Business in her probate
court filings. Gregory notes that under the terms of the
partnership agreement, neither he nor Alfonso contributed
capital to the Business. However, the agreement contemplated
that Alfonso’s capital account would be credited based on his
contribution of service.
In light of Gregory’s prior actions and the dearth of
documentary evidence demonstrating the Business was a sole
proprietorship or non-equity partnership, the probate court
properly rejected Gregory’s argument.
D. The Probate Court Did Not Admit Evidence in
Contravention of the Parol Evidence Rule
Gregory maintains the probate court violated the parol
evidence rule in admitting certain evidence that was inconsistent
with the partnership agreement. Specifically, he challenges the
admission of (1) Morris’s testimony that in 2011, Margarita told
him that she owned 49 percent of the Business; (2) Alfonso’s
testimony that his ownership percentage was 48 percent;
(3) Berkheimer’s opinion that in 1998, when Margarita
transferred her interest in the Business to the Trust, she did not
own 100 percent of the Business; and (4) the Business’s tax
returns. Alfonso responds that Gregory also presented parol
2We note that his insistence in 2013 that he was a partner
contradicts his contention in the litigation that the Trust owns
100 percent of the Business.
18
evidence when he testified that in 1993, he signed an agreement
admitting him into the partnership, which he could not produce
to the court. Both parties misapprehend the parol evidence rule,
which is inapplicable here.
The parol evidence rule “is founded on the principle that
when the parties put all the terms of their agreement in writing,
the writing itself becomes the agreement. The written terms
supersede statements made during the negotiations.”
(Riverisland Cold Storage, Inc. v. Fresno-Madera Production
Credit Assn. (2013) 55 Cal.4th 1169, 1174.) Thus, “[t]he parol
evidence rule will exclude evidence of a prior or contemporaneous
agreement that contradicts the terms of an integrated writing.”
(Take Me Home Rescue v. Luri (2012) 208 Cal.App.4th 1342,
1351; see Civ. Code, § 1625 [“The execution of a contract in
writing . . . supersedes all the negotiations or stipulations
concerning its matter which preceded or accompanied the
execution of the instrument”]; Code Civ. Proc., § 1856, subd. (a)
[“Terms set forth in a writing intended by the parties as a final
expression of their agreement with respect to the terms included
therein may not be contradicted by evidence of a prior agreement
or of a contemporaneous oral agreement”].) The rule does not
prohibit evidence of conduct subsequent to the execution of the
agreement.3 (Charnay v. Cobert (2006) 145 Cal.App.4th 170,
186.)
3 Gregory further argues that Morris could not offer
testimony contradicting the terms of the 1998 assignment of
partnership interest. This document does not contain an
integration clause, and Gregory does not develop any argument
that this document was a final, unambiguous agreement between
19
E. The Probate Court Did Not Err by Admitting
Testimony That Was Biased or Speculative
Gregory objects to the testimony by Alfonso and Morris on
the ground they were biased. Any bias, however, goes to the
weight, not the admissibility, of their testimony. (See Evid. Code,
§ 780, subd. (f) [“the court or jury may consider in determining
the credibility of a witness any matter that has any tendency in
reason to prove or disprove the truthfulness of his testimony at
the hearing, including but not limited to” “the existence or
nonexistence of a bias, interest, or other motive”]; Vorse v. Sarasy
(1997) 53 Cal.App.4th 998, 1001, 1009 [under all but the most
limited circumstances, witness credibility is a question of fact to
be resolved by the trier of fact].) The probate court did not err in
declining to exclude their testimony on this basis.
Gregory also argues that Morris’s testimony was
speculative because he did not have personal knowledge of the
percentage of the Business owned by Margarita in 1998 when she
transferred her interest to the Trust, nor was he familiar with
the partnership agreement. Morris’s lack of knowledge in these
areas has no bearing on his testimony that in 2011, when he met
with Margarita to discuss amendments to her Trust, Margarita
told him she owned 49 percent of the Business. Further, his
testimony that in 1998 she “transferr[ed] 100 percent of her
interest” in the Business to the Trust was premised on the
language in the 1998 assignment of partnership interest, and
therefore it was not speculative.
the signatories. Therefore, we decline to apply the parol evidence
rule to Morris’s testimony concerning the 1998 assignment of
partnership interest.
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Gregory contends Berkheimer’s testimony was speculative.
Berkheimer testified as an expert in accounting, explaining
certain tax preparation issues, including the significance of a
partner’s capital percentage and the entries inserted on the
Schedule K-1 by the tax preparer. His opinion that Margarita
did not own 100 percent of the Business in 1998 was based on his
analysis of the records submitted for his review. Berkheimer’s
statements were grounded in his expertise as a certified public
accountant, and were not speculative.
F. Han v. Hallberg Does Not Require a Different Result
Gregory argues the trial court erred in refusing to recognize
the Trust was the assignee of Margarita’s partnership interest
pursuant to Han v. Hallberg (2019) 35 Cal.App.5th 621.4 To the
contrary, the probate court expressly found Margarita
transferred her 49 percent interest in the Business to the Trust.
Accordingly, the holding in Han does not have a bearing on the
issues raised on appeal.
4 InHan, the appellate court concluded that a trust “is a
person that may associate with other persons in a partnership.”
(Han v. Hallberg, supra, 35 Cal.App.5th at p. 637.)
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DISPOSITION
The order of the probate court as set forth in the statement
of decision filed June 24, 2019, is affirmed. Alfonso is to recover
his costs on appeal.
NOT TO BE PUBLISHED
FEDERMAN, J.*
We concur:
CHANEY, J.
BENDIX, Acting P. J.
*Judge of the San Luis Obispo County Superior Court,
assigned by the Chief Justice pursuant to article VI, section 6 of
the California Constitution.
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