Pool-O'Connor v. Guadarrama

Filed 4/25/23
CERTIFIED FOR PARTIAL PUBLICATION*
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIFTH APPELLATE DISTRICT
KATHY POOL-O’CONNOR et al.,
F083954
Plaintiffs and Respondents,
(Super. Ct. No. BPB-19-002534)
v.
CHRISTOPHER GUADARRAMA, as Trustee, OPINION
etc.,
Defendant and Appellant.
APPEAL from an order of the Superior Court of Kern County. Andrew B.
Kendall, Commissioner.
Law Offices of Robert H. Brumfield and Robert H. Brumfield III for Defendant
and Appellant.
Van Sciver Law and Kurt Van Sciver for Plaintiffs and Respondents.
-ooOoo-
*Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is
certified for publication with the exception of sections I, II and V.
INTRODUCTION
This case involves disputes over the disposition of assets of Albert R. Pool
(Albert)1 following his demise. The assets at issue include monies held in a joint
checking account and real and personal property assets held in trust pursuant to the
Albert R. Pool Family Revocable Trust (unnecessary capitalization omitted) (“Original
Trust Instrument”) as amended and restated in the 2013 Amendment and Restatement of
the Albert R. Pool Family Revocable Trust (unnecessary capitalization omitted)
(“Amended/Restated Trust” or “Trust”). Appellant Christopher Guadarrama
(Christopher) was Albert’s nephew, as well as his attorney-in-fact under a durable power
of attorney (POA), executor under a pour-over will, and successor Trustee under the
Amended/Restated Trust.
Christopher appeals from an order (the “subject order”) of the superior court
sitting in probate (the “probate court”) entered on December 15, 2021, in connection with
an Amended Petition to Surcharge Trustee for Breach of Trust; Petition to Determine
Trust Ownership of Assets and for Damages Pursuant to Probate Code Section 859
(unnecessary capitalization omitted) brought by respondent Kathy Pool-O’Connor
(Kathy) and joined in by respondents Rachelle Lapham (Rachelle) and Sharon Whiteside
(Sharon), each of whom were beneficiaries under the Amended/Restated Trust.
We conclude the subject order should be modified to correct a transpositional
error, and remand for that purpose. In all other respects, the order is affirmed.
1For purposes of clarity and convenience, we refer to the parties and various
family members by their first names. No disrespect is intended.
2.
PROCEDURAL AND FACTUAL BACKGROUND
I. Factual Background
A. Select Family History
Albert was a businessman and property owner in Lebec, California. Albert and his
wife, Mabeleen, owned various residences, vacant lots, and a mini-mart in Lebec. Prior
to her passing, Mabeleen was the primary operator of the mini-mart, and did the banking
for her and her husband. She predeceased Albert in 2002.
Albert and Mabeleen had four biological children, Kathy, Sharon, Diana Pool, and
an older brother, Michael Pool. Michael died before any of the events in question. In
addition, Albert adopted his granddaughter Rachelle who is Kathy’s daughter.
Albert’s wife, Mabeleen, had a sister, Maxine, and Christopher was Maxine’s son.
After Mabeleen died, Sharon, Kathy, and Maxine operated the mini-mart. Maxine took
over managing finances for the mini-mart and for Albert. When Maxine’s health began
to decline, a decision was made to close the mini-mart.
Starting in 2012, Christopher began helping Albert and Maxine manage the family
finances and pay the family bills. Christopher would make out the checks and either
Albert or Maxine would sign them. Maxine would also give Christopher signed blank
checks for Christopher to fill out with payee and payment information. Albert had only
one bank account and it was jointly held by him and Maxine up until 2013 at which time
Christopher was added as an authorized signer on the account (the “joint account”).
From 2012 up to the date of Albert’s passing, only Albert’s money was ever deposited
into the joint account. Albert did little, if any banking himself. He could not read well
and secreted cash in various locations.2 His daughter Sharon described him as a “miser.”
2 For example, in the First Account and Report of Christopher Guadarrama,
Trustee for Albert R. Pool Family Trust (bold type and unnecessary capitalization
omitted), Christopher disclosed a total of $89,894.50 in cash and coins found in Albert’s
home, other real property he owned, automobiles and a recreational vehicle.
3.
B. Albert’s Estate Planning Documents
Albert and Mabeleen created the Original Trust Instrument on December 6, 1992.
(Albert and Mabeleen are sometimes referred to as the “Settlors” in connection with the
Original Trust Instrument. Albert is sometimes referred to as the “Settlor” in connection
with the Amended/Restated Trust.)
As mentioned, Mabeleen predeceased Albert in 2002. The Original Trust
Instrument provided, in part: “Except as otherwise expressly provided …, on the death of
the first Settlor, the designation of beneficiaries or specific gifts in the trusts created …
shall become irrevocable and not subject to amendment or modification.”
On February 28, 2013, Albert executed a series of estate planning documents.
Specifically, and without limitation, Albert executed (1) the Amended/Restated Trust
naming his nephew, Christopher, first successor Trustee of the Amended/Restated Trust,
and Christopher’s mother, Maxine, second successor Trustee in the event Christopher
could not, or would not, serve; (2) a pour-over will in which Albert gifted his entire estate
to the Trustee of his Trust and nominated Christopher to serve as executor of his will; and
(3) the POA appointing Christopher as his attorney-in-fact.
In Exhibit A to the Amended/Restated Trust, Albert “transfer[red] and grant[ed] to
the Trustees all of the property of the Settlor” including “all real property of the Settlor,
and any interests therein ….”; “[a]ll motor vehicles, boats, and trailers” owned by the
Settlor; “[a]ll accounts, certificates of deposit, or other investments with any brokerage
house or financial institution, in which the Settlor has any interest …”; and “[a]ll personal
property of any nature ….”
As to Trust assets not subject to a gift provision, the Amended/Restated Trust
provided that Sharon, Kathy, Diana, Rachelle and Maxine (or their respective issue if
they did not survive Albert) would each receive a 16.6% share of the total Trust property
for a total cumulative percentage share of 83%. Barring certain circumstances and
4.
subject to other contingencies, the remaining 17% share was to be equally divided among
a handful of individuals including Christopher.
C. The Joint Account
On September 8, 2017, Albert added Christopher as an authorized signer to the
joint account. Albert died a little over five months later on February 28, 2018.
Christopher testified that, from the time the POA was signed up until Albert’s death, all
of his acts with respect to the joint account were taken in his capacity as attorney-in-fact.
Christopher testified Albert’s mental capacity diminished a “[c]ouple of months
before his death” in February 2018. When asked if Albert’s mental capacity was
diminishing as early as September or October of 2017, Christopher was unable to say.
Rachelle was asked about Albert’s mental state. She testified that his mind was slipping,
he was forgetful, he would say off-the-wall stuff, and would suddenly go quiet mid-
conversation. One of his eyes was practically closed. Beginning in 2017, he began to
struggle, began falling, had hurt his lip and hit his head, and needed regular blood
transfusions due to leukemia.
Christopher testified that during the period 2012 through 2015, the balance of the
joint account was never much more than $7,800. After said period, several large deposits
were made to the joint account. On March 11, 2016, at Albert’s instruction and prior to
Christopher being added as an authorized signer, Christopher deposited $59,516.24 into
the account. The deposit consisted of proceeds from the sale of 2103 Lebec (the mini-
mart property).
After Christopher was added to the joint account, Christopher caused two
additional large deposits of Albert’s money to be made into the account. Specifically, on
October 23, 2017, Christopher deposited $99,720.46 of Albert’s money into the account.
On November 30, 2017, Christopher deposited another $104,922.07 of Albert’s money
into the account. Christopher was unable to testify as to the source of the funds for these
two deposits. He had no recollection of making the deposits. When asked if Albert told
5.
him “anything about these funds when [Christopher] deposited them, he responded, “I
don’t remember specific deposits and amounts, so no.”
Christopher testified he did not believe the money in the joint account had
anything to do with the Trust. However, when Christopher loaned $25,000 from the joint
account to his cousin, Albert Ratcliffe, in March 2018, he prepared an installment note
for the loan and drafted the note so that it was made payable to the Trust. For several
months thereafter, Christopher, in his capacity as Trustee, collected money on the note
and deposited the money into a new Trust account he had set up. Christopher was asked,
“Doesn’t this indicate that in your mind at this time in March 2018 that you believed the
money in that account was a [T]rust asset?” Christopher responded, “No.” He testified
he believed he was loaning Mr. Ratcliffe his own money. Christopher later explained at
trial that he had previously loaned Mr. Ratcliffe money and had trouble getting it back.
He thought Mr. Ratcliffe would be more likely to pay it back if he thought the Trust
required repayment.
1. Withdrawals From the Joint Account Following Albert’s Death
On or about April 28, 2018, Christopher wrote himself a check from the joint
account in the amount of $200,000. The following month, on or about May 24, 2018,
Christopher wrote himself another check from the joint account in the amount of
$50,000, leaving an ending balance of $6,712.95 in the account.
Christopher was asked what Albert Pool told him about the joint account at the
time he was added to the account as an authorized signer. Christopher responded, “When
we left—well, prior to going there, nothing other than we were going there to add me to
the account.” He was subsequently asked, “On that day and after [Albert] and you signed
this signature card, did [Albert] discuss anything with you about this account?”
Christopher responded, “Yes.” Christopher testified Albert said, “That when he was
gone, it was mine to do with as I wanted.” He was then asked, “did you have any further
discussions after that time, after that day, as to this account and before he died?”
6.
Christopher responded, “No.” He testified that, after that day, Albert never made any
further comments about Christopher receiving the money in the joint account upon
Albert’s death.
Christopher was questioned further about his statement that Albert told him the
joint account would be his to do with as he wanted once Albert passed away. Christopher
was asked the following questions and gave the following answers:
Q. “Did [Albert] mean that you would receive the funds on behalf of the
trust?”
A. “No.”
Q. “Did he discuss the [T]rust with you in that conversation?”
A. “In that conversation, no.”
Q. “Did he ever say, ‘I’m leaving you this money in the account and the
[T]rust is totally separate?”
A. “Yes.”
Q. “When did he say that?”
A. “At a later date he instructed me where there was cash.”
2. Withdrawals From the Joint Account Prior to Albert’s Death
Christopher also made a number of withdrawals from the joint account
prior to Albert’s death. On numerous occasions Christopher withdrew monies from the
joint account via ATMs in California and in Nevada. He also transferred money to his
girlfriend via Western Union on numerous occasions. The probate court found that
$42,059 was withdrawn by Christopher prior to Albert’s passing. Under the POA,
Christopher was authorized to make gifts to himself “in amounts not to exceed the annual
federal gift tax exclusion to him or her, but only in the proportions authorized in
[Albert’s] will, trust, and other estate planning documents.”
7.
D. 433 South Drive, Lebec, California (the “Subject Property”)
The Trust specified a number of special gifts of real and personal property to be
made upon Albert’s death. One gift provision gave Maxine (i.e., Christopher’s mother)
the “right to occupy the property located at 433 South Drive, Lebec, CA [the “Subject
Property”] for her lifetime or until she no longer wishes to occupy the property.” Once
Maxine passed away or chose to vacate the Subject Property, it was to be sold by the
Trustee and the proceeds added to the Trust residue. Because Maxine predeceased
Albert, the gift lapsed under the Trust.
On August 1, 2018, Kathy’s attorney sent Christopher’s attorney a letter
requesting an inventory of assets held in the Trust estate and related information. On
August 23, 2018, Christopher’s attorney responded to Kathy’s attorney. The letter
including the following paragraph:
“The Trustee has also indicated to me that there has been some interest on
the part of some of the beneficiaries of purchasing one or more of the
houses from the trust at fair market value. This includes the house
currently occupied by the Trustee [i.e., the Subject Property]. (He has
occupied if for some time with the permission of Albert …, who intended
that he get the house, but felt unable to change the beneficiaries after his
wife passed.) The Trust expressly permits this—and the Trustee too can
purchase for fair market value. Should the Trustee determine in his
discretion that a sale would be appropriate, he will retain a neutral, licensed
professional appraiser to determine value…. Before any property is thus
sold to a beneficiary, a copy of the appraisal will be sent to your client
along with the other beneficiaries, so they have a chance to make a written
objection supported by legally relevant facts if they desire.”
On November 7, 2018, Christopher’s attorney sent a letter to beneficiaries of the
Trust. The letter included proposed dispositions of several Trust real properties including
the Subject Property. As to the latter, the following proposal was made:
“The Trustee has resided at [the Subject Property], for some time,
with permission from the Settlors, who intended that it be his residence. It
is my understanding that he has spoken with each of the beneficiaries, and
8.
they are willing to waive any interest in this property and consent that it be
transferred to the Trustee.
“The Trustee obtained an appraisal from Michael Burger &
Associates, a licensed appraiser. Mr. Burger is the Probate Referee for the
County of Kern, and is responsible for valuing estates for the court. He has
no personal connection to either myself or the [T]rustee, although
obviously I have used him professionally on numerous occasions.
“I have enclosed the appraisal, which came in at $60,000.00.
“This letter serves as notice of the Trustee’s intent to transfer this
property to himself. Any objections need to be made in writing within
60 days of this letter, or the objection will be deemed waived.”
On January 29, 2019, Christopher, in his capacity as Trustee deeded the Subject
Property to himself by way of a grant deed. The grant deed was recorded on January 31,
2019, and contained the following notation: “Documentary transfer tax is $ 0.00.
Distribution from Grantor Trust.”
On February 12, 2019, Christopher’s attorney wrote Kathy’s attorney concerning
efforts taken in managing the real property of the Trust. As to the Subject Property, the
letter read:
“In the letter to the beneficiaries back in November, we gave notice
of the intent to distributed [sic] this property to the Trustee. It was our
understanding that all beneficiaries consented to this as being consistent
with the decedent’s wishes and because Christopher has resided there for
years, maintaining the property. We received no objections, so that
property was transferred as proposed.”
II. Procedural Background
A. Pleadings and Interim Orders
On June 27, 2019, Kathy filed a Petition to Remove Trustee and to Appoint
Successor Trustee, and for Current Trustee to File Accounting (unnecessary
capitalization omitted) (“Removal Petition”).
On November 5, 2019, Kathy filed a Petition to Suspend Trustee[’]s Powers and
Appoint an Independent Person [Prob[ate] Code [section] 15642] (unnecessary
9.
capitalization omitted). That same day, Kathy also filed an Ex-Parte Application and
Declaration to Suspend Trustee[’]s Powers and Appoint an Independent Person
[Prob[ate] Code [section] 15642] (unnecessary capitalization omitted).
Following the parties’ briefing on Kathy’s ex parte application, the probate court
issued a minute order indicating it had granted the ex parte application to suspend
Christopher’s powers as Trustee. On February 21, 2020, the probate court issued a
formal order suspending Christopher’s powers as Trustee “pending the action.” The
formal order required, among other things, that Christopher’s attorney provide the court
with a “plan for the timeline for the distribution” of Trust assets, and authorized
Christopher to “pay up to $2,000 for any ongoing expenses” but prohibited him from
contacting Trust beneficiaries during his suspension.
On July 13, 2020, Kathy filed an Amended Petition to Surcharge Trustee for
Breach of Trust; Petition to Determine Ownership of Assets and for Damages Pursuant to
Probate Code Section 859 (unnecessary capitalization omitted) (“Surcharge Petition”).
On August 25, 2020, the parties filed a stipulation in which they stipulated, among
other things, that (1) Christopher would resign as Trustee without prejudice to his right to
(a) contest the claims made in the Removal Petition and Surcharge Petition; (b) seek
reimbursement of costs incurred as Trustee and to claim Trustee fees; (2) that the court
should appoint an identified individual as successor Trustee (a) under specified terms of
payment for successor Trustee fees and expenses; and (b) with a provision for the
appointment of counsel for the successor Trustee under specified terms; (3) that the court
authorize the successor Trustee to “sell all vacant real property … along with all vehicles
and personal properties without further notice, petition, or hearing”; and (4) that
Christopher will provide an accounting for the period preceding appointment of the
successor Trustee. On September 1, 2020, the probate court accepted the parties’
stipulation.
10.
On October 14, 2020, Christopher filed objections to the Surcharge Petition. On
October 28, 2020, Christopher filed his final accounting for the period he served as
Trustee. On April 5, 2021, Kathy filed objections to Christopher’s final accounting.
On July 6, 2021, Rachelle and Sharon joined in the Surcharge Petition brought by
Kathy. The probate court granted the joinder but indicated they were bound by the
pleadings and could not raise new issues.
B. The Probate Court Granted, In Part, and Denied, In Part, the Relief
Sought By Way of the Surcharge Petition
Trial on the Surcharge Petition commenced on July 7, 2021.
On December 15, 2021, the probate court issued its Ruling and Order on Court
Trial Regarding Amended Petition to Surcharge Trustee for Breach of Trust; Petition to
Determine Trust Ownership of Assets and for Damages Pursuant to Probate Code
Section 859; and Final Accounting by Former Trustee Christopher Guadarrama
(unnecessary capitalization omitted) (i.e., the “subject order”) from which Christopher
appeals.
In the subject order, the probate court made the following findings and orders:
(1) “[Christopher] is ordered to reconvey title of the [Subject Property] to the [T]rust[]”;
(2) “[Christopher] shall be allowed [a] right of first refusal to buy the [Subject Property]
at fair market value determined as of the date the court’s order becomes final[]”;
(3) “Double damages under Probate Code section 859 are denied[]”; (4) “The [joint
account] is not a [T]rust asset[]”; (5) “[Christopher] is ordered to deliver $335,779 to [the
new] [T]rustee … or any other duly appointed successor [T]rustee[]”; (6) “Trustee’s fees
are denied[]”; (7) “[Christopher’s request for reimbursement of $4,017 in loan payments
is denied[]”; (8) “[Kathy’s] reasonable attorney’s fees and costs shall be paid out of the
[T]rust[]”; (9) “The [T]rustee shall deduct: the cost of cable, internet, utilities, and
insurance expenses that were paid by the [T]rust from the distributive shares of the
beneficiaries who benefitted; $2,198 for costs related to the Cadillac from Ratcliffe’s
11.
distributive share; $440.00 for the cost of car covers from [Christopher’s] distributive
share[]”; (10) “[Kathy’s] requests for reimbursement to the [T]rust of $3,279 in pet-
related expenses and $11,955 in home repair costs are denied[]”; and (11) “[Kathy’s]
request that [Christopher] be ordered to pay $3,171 for Rachelle[’s] … towing fees is
denied.”
On February 9, 2022, Christopher timely filed a notice of appeal challenging the
subject order. On appeal Christopher challenges only certain aspects of the subject order,
namely the orders and related findings: (1) requiring Christopher to reconvey title to the
Subject Property to the new Trustee; (2) requiring Christopher to deliver $205,643 to the
Trustee (i.e., a portion of the $335,779 he was ordered to deliver to the Trustee) to
reimburse for two withdrawals taken from the joint account; (3) requiring Christopher to
deliver $28,059 to the Trustee (again, a portion of the aforementioned $335,779) for other
withdrawals taken from the joint account; (4) requiring Christopher to deliver $20,281 to
the Trustee (the remaining portion of the aforementioned $335,779) for withdrawals
made from the joint account to pay his attorney; and (5) denying Christopher fees for his
service as Trustee. `
Additional facts relevant to Christopher’s appeal are discussed below.
DISCUSSION
I. Standard of Review
“Where findings of fact are challenged on a civil appeal, … ‘the power of an
appellate court begins and ends with a determination as to whether there is any
substantial evidence, contradicted or uncontradicted,’ to support the findings below.”
(Jessup Farms v. Baldwin (1983) 33 Cal.3d 639, 660.) We “view the evidence in the
light most favorable to the prevailing party” and give that party “the benefit of every
reasonable inference.” (Ibid.) All conflicts in the evidence are resolved in favor of the
prevailing party. (Ibid.) “[W]e do not reweigh the evidence.” (Schmidt v. Superior
Court (2020) 44 Cal.App.5th 570, 581. (Schmidt).)
12.
Where the construction of a statute or written instrument is at issue, our review is
de novo “unless the interpretation depends on the competence or credibility of extrinsic
evidence or a conflict in that evidence.” (Pena v. Dey (2019) 39 Cal.App.5th 546, 551.)
“[I]n a bench trial, the trial court is the ‘sole judge’ of witness credibility.” (Schmidt,
supra, 44 Cal.App.5th at 582.) “Credibility determinations … are subject to extremely
deferential review. (Ibid.)
II. The Probate Court Did Not Err By Ordering Christopher to Reconvey the
Subject Property to the Trustee
The terms of the Amended/Restated Trust are not in dispute. With regard to the
Subject Property, the Trust provides, in relevant part: “Maxine … shall have a right to
occupy the [Subject Property] for her lifetime or until she no longer wishes to occupy the
property…. Upon the [sic] Maxine’s death or her choice to vacate the premises, the
[T]rustee shall sell the property and add the proceeds to the residue of the [T]rust.” The
Trust further provides that the gift shall lapse if Maxine does not survive Albert. Maxine
did not survive Albert.
As discussed previously, instead of following the above provision, Christopher,
through a November 7, 2018, letter written by his attorney, proposed that he transfer the
property to himself. The letter advised its addressees that failure to object within 60 days
of the letter would be deemed a waiver of any objection to the transfer. Having received
no objections within that period of time, Christopher deeded the property to himself.
At trial, Christopher offered three defenses in support of his decision to transfer
the Subject Property to himself. He contended that the Trust beneficiaries verbally
consented to transfer; that his lawyer’s November 7, 2018, letter constituted a notice of
proposed action and the beneficiaries did not object; and that he relied on his counsel’s
advice in making the transfer.
The probate court found against Christopher on each of the aforementioned
defenses. On appeal, Christopher contends that “[a]ny one of these defenses, if justified,
13.
would result in a lawful distribution of the property.” However, Christopher only argues
the court erred by failing to recognize that the transfer was lawful due to the
beneficiaries’ failure to object to his lawyer’s November 7, 2018, notice of the proposed
action. Consequently, he has forfeited any argument related to his remaining defenses in
connection with his transfer of the Subject Property to himself.3 (Golden Door
Properties, LLC v. County of San Diego (2020) 50 Cal.App.5th 467, 555 [“Issues not
raised in an appellant’s brief are deemed waived or abandoned.”].)
With regard to the November 7, 2018, notice of proposed action, the probate court
wrote: “[The attorney’s] letter to the beneficiaries informing them that [Christopher]
intended to distribute the house to himself unless they objected did not cure the breach.
A trustee may not buy or exchange trust property through use of the notice of proposed
action procedure. (Prob. Code, § 16501, subd. (d)(5), (6).).”4 Section 16501 provides, in
part: “Notwithstanding any other provision of this chapter, the trustee may not use a
notice of proposed action in any of the following actions: [¶ … ¶] (5) Sale of property of
the trust to the trustee or to the attorney for the trustee[; and ¶] (6) Exchange of property
of the trust for property of the trustee or for property of the attorney for the trustee.”
(§ 16501, subd. (d)(5), (6).)
Christopher acknowledges section 16501 bars a trustee from using the notice of
proposed action to effectuate a “ ‘sale’ of trust property to himself …, or an ‘exchange’
of trust property for his own. … However, [he contends, it] pointedly does not bar use of
3 Christopher does not challenge the probate court’s finding that not all
beneficiaries verbally consented to the transfer, that Christopher admitted he did not
discuss the matter with beneficiary Heath Poff (Sharon’s son), and that Rachelle credibly
testified Christopher never discussed the matter with her. Nor does Christopher
challenge the court’s finding and determination that the advice of counsel defense is not
applicable due to the fact Christopher told his counsel that all beneficiaries had consented
to the transfer, which was not true.
4 All statutory references are to the Probate Code unless otherwise noted.
14.
the procedure where a trustee seeks to ‘distribute’ property to himself.” In support of his
argument, Christopher notes that subdivision (a)(2) of the statute uses the
term “distribution” whereas subdivision (d) does not.5 Thus, he argues, “the
[L]egislature made a deliberate choice to permit trustees to use the notice of proposed
action mechanism to shield themselves from liability for making ‘distributions’ of trust
property to themselves.”
Christopher does not proffer any definitions for the terms “distribution,” “sale,” or
“exchange” as used in section 16501. Aside from noting the varied use of the terms in
section 16501, his argument is based solely on (1) his use of the term “distributed” in the
grant deed he executed as Trustee to convey the Subject Property to himself; and (2) the
probate court’s use of the term “distribution” in the subject order to describe
Christopher’s conveyance of the Subject Property to himself. Christopher contends the
court’s use of the term twice on page 4, three times on page 6, and three times on page 7,
constitutes a finding that the conveyance of the Subject Property was a distribution and
not a sale or exchange of Trust property to himself.
Christopher’s argument is not persuasive. The probate court used the term
“distribution” in describing the conveyance on those specific pages, as follows: “[Kathy]
asks that [Christopher] be surcharged for multiple alleged breaches of trust, including the
distribution of … [the Subject Property] to himself[,]” (italics added). “[Christopher]
states that the beneficiaries consented to his distribution of [the Subject Property] …[,]”
(italics added). “[Christopher] never received any objections to the proposed
distribution[,]” (italics added). “[Christopher] admitted during his testimony that he
5 Subdivision (a)(2) of Probate Code section 16501 provides: “(a) The trustee
who elects to provide notice pursuant to this chapter shall deliver notice pursuant to
Section 1215 of the proposed action to each of the following: [¶ …¶] (2) A beneficiary
who would receive a distribution of principal if the trust were terminated at the time the
notice is given.” (§ 16501, subd. (a)(2).)
15.
never spoke to beneficiary Heath Poff about consenting to the distribution[,]” (italics
added). Rachelle … also testified that [Christopher] never discussed the distribution with
her[,]” (italics added). “[Christopher’s] distribution of [the Subject Property] to himself
was unauthorized and a breach of trust[,]” (italics added). “[Christopher proffered the
defense that] he relied on the advice of counsel in distributing the house to himself[,]”
(italics added). “Rachelle … testified credibly that [Christopher] never discussed the
distribution with her[,]” (italics added). “[Christopher’s counsel’s] letter to the
beneficiaries informing them that [Christopher] intended to distribute the house to
himself unless they objected did not cure the breach. A trustee may not buy or exchange
trust property through the use of the notice of proposed action procedure[,]” (italics
added).
“A court order is interpreted under the same rules for interpreting writings in
general. [Citations.] The language of a writing governs if it is clear and explicit. But
when it is susceptible ‘to two interpretations, the court should give the construction that
will make the [writing] lawful, operative, definite, reasonable and capable of being
carried into effect and avoid an interpretation which will make the [writing]
extraordinary, harsh, unjust, inequitable or which would result in absurdity.’ [Citation.]
Subsequent actions by the rendering judge may be considered as bearing upon the
judgment’s intended meaning and effect.” (In re Marriage of Falcone & Fyke (2012)
203 Cal.App.4th 964, 989.) “If an order is ambiguous, the reviewing court may examine
the record for its scope and effect and may look at the circumstances of its making.” (In
re Marriage of Samson (2011) 197 Cal.App.4th 23, 27.)
It is clear from the subject order that the probate court did not find that
Christopher was, as the language of the referenced statute provides, “[a] beneficiary who
would receive a distribution of principal if the trust were terminated at the time the notice
is given.” (§ 16501, subd. (a)(2).) Nothing in the subject order suggests otherwise and to
so interpret the subject order would result in absurdity. Unmistakably, the court found
16.
that Christopher’s conveyance of the subject property was a “sale” or “exchange” as
those terms are used in the statute. (Id., at subd. (d).) That finding is supported by the
court’s finding that “[Christopher’s] distribution of [the Subject Property] to himself was
unauthorized and a breach of trust[]” and its order that he reconvey title to the property to
the Trust. The court even cited subdivision (d)(5) and (d)(6) of section 16501 as
authority for its determination that Christopher could not use the notice of proposed
action procedure to cure the breach.
It is also evident that the term “distribution” in the subject order was largely used
to describe how the litigants themselves described the conveyance. In those instances
where the court used the term as an easy reference to the conveyance, it is clear that the
court was not using the term to describe a distribution that complied with Trust
provisions. The court was merely describing the process of conveying the asset from the
Trust to Christopher, nothing more. Christopher does not proffer an alternative meaning
for the word “distribution” and it is not the job of an appellate court to develop an
appellant’s arguments for him or her. (Dills v. Redwoods Associates, Ltd. (1994)
28 Cal.App.4th 888, 890, fn. 1.) The fact that Christopher used the term in the grant deed
by which he conveyed the Subject Property to himself is irrelevant and of no moment.
Christopher had no entitlement to the Subject Property under the terms of the Trust.
Finally, we note that the November 7, 2018, letter from Christopher’s counsel in
which he gave notice of the proposed action reads, in relevant part: “This letter is
intended to be an update as to the status of the [T]rust, as well as notice of intent to sell a
property to the [T]rustee for fair market value as provided in Paragraph 7.13 of the
[T]rust[,]” (italics added). This is the very letter that Christopher relies upon in arguing
he was entitled to the Subject Property. Similarly, the earlier letter from Christopher’s
attorney on August 23, 2018, indicated the notice of proposed action would follow if
Christopher “determine[d] in his discretion that a sale [to Christopher] would be
appropriate.” Both the notice of proposed action sent to Trust beneficiaries and the
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prefatory letter sent to Kathy’s attorney characterize the proposed action as a sale. A
notice of proposed action may not be used to effectuate a “sale of property of the trust to
the trustee ….” (§ 16501, subd. (d)(5).)6
We affirm the probate court’s disposition of the Subject Property in the subject
order.
III. The Probate Court Did Not Err In Ordering Christopher to Deliver
Approximately $205,643 Plus Interest to the Current Trustee
As discussed, in the few months that preceded Albert’s death, Christopher made
two large deposits into the joint account in the amounts of $99,720.46 and $104,922.07
for a total deposit of $204,642.53 (the “subject funds”). Christopher could not provide
any information concerning the deposits. He did not know the source of the funds and
had no recollection of making the deposits. There were no discussions between
Christopher and Albert concerning the funds.
Notably, Christopher treated money in the joint account as if it were money
belonging to the Trust. He loaned money from the account to Mr. Ratcliffe and had
Mr. Ratcliffe sign a promissory note in favor of the Trust. The probate court could have
concluded this was an acknowledgment by Christopher that the subject funds in the joint
account belonged to the Trust; and that, at the time he made the deposits, he did so with
the belief he was properly allocating that money to the Trust. Substantial evidence
supports such a finding. However, there are more compelling reasons to affirm the
probate court’s order with respect to the subject funds. As discussed below,
6
Moreover, to the extent the conveyance of the Subject Property to Christopher
was intended to be offset against his just entitlement under the Trust, if any, it would
nonetheless qualify as an “[e]xchange of property of the trust for property of the
trustee ….” (§ 16501, subd. (d)(6).) A notice of proposed action cannot be used to
effectuate such an exchange. (Ibid.)
18.
Christopher’s deposit of the subject funds into the joint account was a breach of his
fiduciary obligations as Albert’s attorney-in-fact.
An attorney-in-fact is a fiduciary. (§ 39.) “The exercise of authority by an
attorney-in-fact is subject to the attorney-in-fact’s fiduciary duties.” (§ 4266.) “[I]n
dealing with property of the principal, an attorney-in-fact shall observe the standard of
care that would be observed by a prudent person dealing with property of another ….”
(§ 4231, subd. (a).) “An attorney-in-fact has a duty to act solely in the interest of the
principal and to avoid conflicts of interest.” (§ 4232, subd. (a).) “The attorney-in-fact
shall keep the principal’s property separate and distinct from other property in a manner
adequate to identify the property as clearly belonging to the principal.” (§ 4233,
subd. (a).) An attorney may comply with the obligation to keep the principal’s property
separate and distinct from other property “if the property is held in the name of the
principal or in the name of the attorney-in-fact as attorney-in-fact for the principal.”
(§ 4233, subd. (b).) “The attorney-in-fact shall keep records of all transactions entered
into by the attorney-in-fact on behalf of the principal.” (§ 4236, subd. (a).) An attorney-
in-fact is prohibited from making gifts of the principal’s property, and from creating
survivorship interest in the principal’s property absent an express grant of such authority
in the power of attorney. (§ 4264, subds. (c) & (e).)
Christopher did not adhere to his fiduciary duties in managing the subject funds.
He failed to keep the deposits separate and distinct from other property and, instead,
deposited the funds into an account that did not clearly identify the property as belonging
to Albert. He did not avoid the conflict-of-interest that presented itself in depositing
funds into a joint account to which Christopher had unfettered access in his personal (as
opposed to fiduciary) capacity. He did not keep a record of the transactions involving the
subject funds which were the two largest deposits ever made to the joint account as
reflected in the record on appeal. Christopher’s interest in the joint account was held in
Christopher’s individual capacity. That is, he was not named to the joint account in the
19.
capacity as attorney-in-fact for Albert. A prudent person acting as attorney-in-fact would
have put the subject funds in an account that only Albert or his attorney-in-fact, acting in
such capacity, could have accessed.
Importantly, the POA did not authorize Christopher to create a survivorship
interest in subject funds by depositing them into the joint account. There is no evidence
that Albert instructed Christopher to deposit the funds into the joint account, that Albert
intended for this money to be deposited in the joint account, or that Albert knew the
money was deposited into the joint account. The survivorship interest in the subject
funds was created by Christopher at a time when Albert’s health was failing and his death
was likely imminent. Whether couched as a “gift” or the creation of a “survivorship
interest,” the act of depositing the subject funds into the joint account violated
section 4264. (See § 4264, subds. (c) & (e).)
In Schubert v. Reynolds, the defendant was one of four daughters of the decedent.
(Schubert v. Reynolds (2002) 95 Cal.App.4th 100, 102 (Schubert).) Approximately two
months prior to the decedent’s death, the decedent executed a power of attorney
appointing the defendant as his attorney-in-fact. (Ibid.) The day before the decedent
died, the defendant, in her capacity as attorney-in fact, created an inter vivos trust which
she executed as both trustor and trustee. (Ibid.) The inter vivos trust created in the
defendant a life estate in the decedent’s house to the exclusion of her sisters and contrary
to the decedent’s will. (Id. at pp. 102, 104.) The plaintiff (i.e., the defendant’s sister)
filed suit for declaratory relief and constructive trust. (Ibid.) The matter was tried and a
judgment issued declaring the inter vivos trust invalid. (Id. at p. 103.) The appellate
court affirmed the judgment. (Id. at p. 110.) The appellate court, like the trial court
before it, concluded that subdivision (f) of section 4264 prohibited the creation of the
trust because it “constituted an attempt to change the beneficiary designation, as
established under either the 1988 will or the laws of intestate succession. (Schubert, at
p. 104.)
20.
Similar to Schubert, Christopher’s deposit of the subject funds into the joint
account amounted to an attempted change in the beneficiary designations under Albert’s
will and the Trust. This violated subdivision (f) of section 4264 which provides, absent
an express grant of authority in a power of attorney, an attorney-in-fact is prohibited from
“[d]esignat[ing] or chang[ing] the designation of beneficiaries to receive any property …
on the principal’s death.” (§ 4264, subd. (f).) But for the fact the subject funds were
deposited into the joint account, the monies would have passed to the Trust by virtue of
Albert’s pour-over will.
Moreover, even had Albert orally approved Christopher’s deposit of subject funds
into the joint account, Christopher would not be entitled to them. In Estate of Huston, the
petitioner was the attorney-in-fact for the decedent. (Estate of Huston (1997)
51 Cal.App.4th 1721, 1723 (Huston).) Prior to decedent’s death, the decedent verbally
instructed the petitioner to purchase an annuity with a certificate of deposit that would be
maturing soon. (Id. at p. 1724.) The decedent wanted to provide for the petitioner and it
was agreed between them that the decedent would receive the annuity payments during
her lifetime and that the annuity would pass to the petitioner upon her death. (Ibid.) The
petitioner, in his capacity as attorney-in-fact, used the certificate of deposit proceeds to
purchase the annuity and instructed the bank as to the decedent’s wishes concerning
annuity payments during her lifetime and that it would pass to the petitioner on
decedent’s death. (Id. at pp. 1724–1725) After the decedent died, the petitioner learned
that the annuity had not been structured in accordance with the decedent’s wishes. (Id. at
p. 1725.) The petitioner, in his individual capacity, then filed a petition to determine
ownership of the annuity. (Id. at p. 1723.) A residuary beneficiary under the decedent’s
will opposed the petition on grounds the power of attorney expressly prohibited the
petitioner from making gifts to himself. (Id. at p. 1726) The trial court, “as sole judge of
the credibility of witnesses,” accepted the petitioner’s testimony concerning the details of
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the transaction, and entered an order holding that the decedent’s estate held the annuity in
trust for the petitioner. (Id. at pp. 1725–1727.)
On appeal, the appellate court determined “substantial evidence … support[ed] the
trial court’s findings that the annuity was purchased with the decedent’s knowledge,
consent, and approval. (Huston, supra, 51 Cal.App.4th at p. 1727.) Notwithstanding, the
court reversed the judgment. (Id. at p. 1728.) Relying on section 4264, subdivision (c),
which prohibits an attorney-in-fact from making a gift of the principal’s property to
himself absent express authorization in the power of attorney, the appellate court
determined the gift was void because it was outside the scope of the power of attorney.
(Id. at pp. 1726–1727.) The court then considered “whether decedent’s oral assent to the
gift served to ratify the transaction and make the gift valid.” (Id. at p 1727.) The court
held it did not. (Ibid.) It wrote, “ ‘[a] power of attorney is a written authorization to an
agent to perform specified acts on behalf of the principal. [Citation.]’ The rights and
liabilities created by such authority are centered in the law of agency. [Citations.]”
(Ibid.) “Because a power of attorney must be in writing, any act performed by the agent
acting under the power of attorney must therefore be ratified in writing to be valid.”
(Ibid.) The court held that, despite the fact the evidence showed the decedent wished to
make the gift, the gift was void for failure to comply with necessary formalities. (Ibid.)
Here, even had evidence existed to demonstrate that Albert wanted Christopher to
have the subject funds, the lack of any written document authorizing Christopher to
deposit the monies into the joint account would be fatal to Christopher’s appeal
concerning the subject funds.
We conclude Christopher’s deposit of the subject funds in the amount of
$204,642.53 violated section 4264, subdivision (e) by creating a survivorship interest in
the subject funds in his favor. Christopher’s deposit of the subject funds violated
section 4264, subdivision (f) by effectuating a change in the designation of beneficiaries
who would have otherwise shared in the entitlement to the subject funds. Finally,
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Christopher’s deposit of the subject funds was tantamount to gifting the funds to himself
in violation of section 4264, subdivision (c).
Section 4231.5 provides, in part: “If the attorney-in-fact breaches a duty pursuant
to [division 4.5 of the Probate Code pertaining to powers of attorney], the attorney-in-fact
is chargeable with any of the following, as appropriate under the circumstances: [¶]
(1) Any loss or depreciation in value of the principal’s property resulting from the breach
of duty, with interest.” Given our determination that Christopher violated section 4264
which is part of division 4.5 of the Probate Code, we see no error in the probate court
having ordered Christopher to deliver these sums plus interest to the current Trustee.
We agree with Christopher, however, that a transpositional error occurred in the
amount of the subject funds. The probate court indicated the amount of those deposits
was $205,643. The evidence, however, demonstrates without contradiction that the
amount was actually $204,642.53. Thus, we remand the matter to the court to correct the
sum of, and interest attributable to, the subject funds and, with that modification, affirm
the court’s order with respect to those funds.
IV. The Probate Court Did Not Err In Ordering Christopher to Deliver to the
Current Trustee Sums that Were Withdrawn From the Joint Account During
Albert’s Lifetime Plus Interest Thereon
A. The Probate Court Did Not Err in Ordering Christopher to Deliver
$28,059 Plus Interest to the Current Trustee
The probate court found that Christopher withdrew $42,059 from the joint account
prior to Albert’s death on February 28, 2018, in violation of the POA and “the law
concerning joint tenancy accounts.” The POA only allowed Christopher to make gifts to
himself “in amounts not to exceed the annual federal gift tax exclusion …, but only in the
proportion authorized in [Albert’s] will, trust, and other estate planning documents. The
court determined, and the parties do not dispute, the amount of the annual gift tax
exclusion in 2017 was $14,000. The court further determined Christopher “was entitled
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to just one-seventh of 17 percent of the [T]rust residual, plus one-half of Maxine’s
16.6 [percent] share, under the [Amended/Restated Trust].”
On appeal, Christopher argues the court erred by impliedly finding Albert did not
give Christopher permission to make the withdrawals, a finding that is not supported by
the evidence. Rather, Christopher argues, the only evidence in the record demonstrates
Albert wanted Christopher to “own all of the joint account funds after Albert’s death” and
that if Christopher had “not withdrawn the funds prior to Albert’s death, he would have
inevitably acquired them by operation of the right of survivorship.” Christopher does not
contend the withdrawals were for Albert’s benefit. He only contends that the evidence
demonstrates Albert wanted all the money in the joint account to pass to Christopher.
Respondents counter that “[a]n attorney-in-fact has a duty to act solely in the
interest of the principal and to avoid conflicts of interest,” quoting section 4232,
subdivision (a). Respondents contend Christopher used the $42,059 on himself and for
his own benefit. Respondents argue “when a fiduciary’s actions are questioned, the
fiduciary has the burden of proof to justify his actions,” citing Purdy v. Johnson (1917)
174 Cal. 521, 527. (See ibid. [“Trustees are under an obligation to render to their
beneficiaries a full account of all their dealings with the trust fund [citation], and where
there has been a negligent failure to keep true accounts, or a refusal to account, all
presumptions will be against the trustee upon a settlement.”]; LaMonte v. Sanwa Bank
California (1996) 45 Cal.App.4th 509, 517 (LaMonte) [“The beneficiary of the trust has
the initial burden of proving the existence of a fiduciary duty and the trustee’s failure to
perform it; the burden then shifts to the trustee to justify its actions.”].) Respondents
further note there is no evidence that Albert permitted the withdrawals.
Undoubtedly, Christopher, as attorney-in-fact, had a fiduciary duty to Albert under
the POA. (§§ 39, 4266.) Moreover, Christopher’s withdrawals from the joint account
during Albert’s lifetime were, as admitted by Christopher, performed in his capacity as
attorney-in-fact. An attorney-in-fact is required to avoid conflicts of interest (§ 4232,
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subd. (a)); has a duty to “keep records of all transactions entered into by the attorney-in-
fact on behalf of the principal” (§ 4235, subd. (a)); and is precluded from making gifts to
himself absent an express grant of authority (§ 4264, subds. (c)). As noted, Christopher’s
authority to make gifts to himself was limited to the federal gift tax exclusion of $14,000.
Conversely, had Christopher left the withdrawn funds in the joint account and,
assuming Albert would not have withdrawn the funds from the account, they would have
passed to Christopher by right of survivorship. The California Multiple-Party Accounts
Law (CMPAL) (§ 5100 et seq.) provides, in part: “An account belongs, during the
lifetime of all parties, to the parties in proportion to the net contributions by each, unless
there is clear and convincing evidence of a different intent.” (§ 5301, subd. (a).) “Sums
remaining on deposit at the death of a party to a joint account belong to the surviving
party or parties as against the estate of the decedent unless there is clear and convincing
evidence of a different intent….” (§ 5302, subd. (a).)
Only Albert’s money was deposited in the joint account. Thus, during Albert’s
lifetime, the money in the joint account belonged to Albert alone. (§ 5301.)
Christopher’s personal withdrawals from the joint account during Albert’s lifetime were,
according to Christopher, performed under the authority of the POA. Under the POA,
however, he was limited from making gifts to himself in excess of $14,000, the federal
gift tax exclusion. There is no evidence Albert approved the withdrawals or an increase
in the gift amount limitation. Thus, Christopher’s withdrawals from the account in
excess of $14,000 were outside his authority under the POA. Although he had the power
to withdraw from the joint account by virtue of the fact he was a joint holder of the
account, he did not have the right to make the withdrawals as attorney-in-fact absent
express written authorization. (Huston, supra, 51 Cal.App.4th at p. 1727 [“any act
performed … under the power of attorney must … be ratified in writing to be valid”].)
We agree with respondents that it was incumbent on Christopher to demonstrate
25.
sufficient authorization for the withdrawals but the record is lacking any such evidence.
(See LaMonte, supra, 45 Cal.App.4th at p. 517.)
We now turn to Christopher’s contention that he would have been entitled to the
sums withdrawn upon Albert’s death had he not withdrawn them. The problem with
Christopher’s contention is that he did withdraw the sums from the joint account. In
doing so, he not only violated his fiduciary duties to Albert, but he also removed the
funds from the very source that would have given him a right of survivorship in the
funds—the joint account. Having wrongfully removed the sums from the joint account
during Albert’s lifetime, Christopher essentially stood in the position of a constructive
trustee of the funds for the benefit of Albert or, following Albert’s death, his heirs. He
effectively extinguished any right of survivorship in the funds that he might have
otherwise had by withdrawing them from the joint account.
We conclude the probate court did not err in ordering Christopher to deliver
$28,059 plus interest in the amount of $9,821, to the current trustee as a result of the
aforementioned withdrawals.
B. The Probate Court Did Not Err in Offsetting the Gift of $14,000
Christopher Made to Himself From Christopher’s Share as Trust Beneficiary
Christopher challenges the subject order to the extent it provides that the $14,000
gift that Christopher was authorized to make, and did make, to himself from the joint
account “be deducted from his distributive share” of the Trust. He argues the probate
court’s determination “is contrary to the court’s finding that the joint account ‘is not a
[T]rust asset.’ ”
The POA provides, in part: “Notwithstanding any other provision in this Power,
my attorney in fact may make gifts in amounts not to exceed the annual federal gift tax
exclusion to him or her, but only in the proportions authorized in my will, trust, and other
estate planning documents[,]” (italics added). Christopher argues this provision “does
not mean that such gifts must be made from trust assets. It merely limits the amount of
26.
such gifts to the ‘proportions’ authorized in the [T]rust. Because the $14,000 was not a
trust asset, ordering it to be deducted from [Christopher’s] distributive share would result
in an unmerited windfall for the other beneficiaries.”
Here, the record is silent concerning the meaning of the italicized language in the
preceding paragraph. However, the POA’s limitation that gifts may only be made in
proportion to the dispositions made in Albert’s will, trust and other estate planning
documents, evidences a clear intent on the part of Albert, as principal, to protect the
interests of his devisees and Trust beneficiaries in their inheritances.
We disagree with Christopher’s contention that the probate court’s order that the
$14,000 gift be deducted from Christopher’s distributive share of the Trust is inconsistent
with the court’s determination that the joint account is not a Trust asset. Once the gift
was made, it was no longer part of the joint account. The court’s determination that the
joint account is not a Trust asset did not affect monies that were no longer part of the
joint account at the time of Albert’s death.
We conclude the probate court did not err in ordering the $14,000 gift be deducted
from Christopher’s distributive share of the Trust.
V. Christopher’s Remaining Claims Are Denied
Christopher contends that, in the event this court finds in his favor on any of the
above matters, it should reverse the probate court’s denial of Christopher’s request for
Trustee fees and denial of his request for attorney fees. Because we have not found in
Christopher’s favor on any of the matters above—with the minimal exception of
acknowledging the need to correct a transpositional error—we decline Christopher’s
invitation to reverse the court’s orders with regard to his request for Trustee fees and
attorney fees.
DISPOSITION
To the extent the subject order of the probate court included an order that
Christopher deliver to the current Trustee of the Trust “$205,643, plus interest of
27.
$71,975, calculated at ten percent over 3.5 years,” we remand the matter to the probate
court to modify the subject order by correcting the stated principal sum from $205,643 to
$204,642.53, and recalculating the interest thereon based on the corrected principal sum.
All other sums ordered delivered to the current Trustee are affirmed in the
amounts stated in the subject order and, together with the recalculated sums referenced
above, are to be delivered to the current Trustee. All remaining provisions of the subject
order are affirmed.
With the modification referenced above, the subject order is affirmed in its
entirety. Costs on appeal are awarded to respondents Kathy Pool-O’Connor, Rachelle
Lapham and Sharon Whiteside.
SNAUFFER, J.
WE CONCUR:
LEVY, Acting P. J.
DE SANTOS, J.
28.