Charles Taylor Ii v. Patricia Caiarelli, Respondent/cross

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
In the Matter of the Estate of William
Ross Taylor, No. 68222-9-1
(consolidated with 68224-5)
Deceased.
DIVISION ONE
PATRICIA CAIARELLI,
Respondent/
Cross-Appellant,
UNPUBLISHED OPINION
CHARLES E. TAYLOR II, FILED: May 19, 2014
Appellant,
REUBEN TAYLOR, JR., and
EMILY TAYLOR, and the marital
community thereof,
Cross-Respondents
and
ELIZABETH M. TAYLOR,
Respondent.
Becker, J. —William Ross Taylor died in a boating accident in 2005. This
appeal arises from a jury trial of a dispute among his survivors over ownership of
nonprobate assets. The participants in the dispute include Patricia Caiarelli,
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William's ex-wife and the mother of his young son, A.C.T.; William's brother,
Charles Taylor; and William's parents, Reuben and Emily Taylor. A jury decided
that William designated Charles to hold assets in trust for A.C.T., not to keep
them for himself. We affirm the judgment on the verdict against Charles. We
reverse the trial court's orders dismissing Reuben and Emily. The matter is
remanded to permit Caiarelli, who is acting as her son's guardian, to pursue her
claim that Reuben and Emily exerted undue influence over William.
FACTS
This is the second time this matter has been before this court. Our
previous opinion sets forth the genesis of the dispute—a young man devastated
by the loss of his job at Microsoft and the breakdown of his marriage, the
bitterness of the dissolution proceedings, his love and concern for his young son,
a will that directed all of his assets into a trust for his son, his untimely death, the
mishandling of his estate by his brother leading to the appointment of a new
estate administrator, and procedural irregularities requiring reversal of summary
judgment orders that prematurely resolved the ownership issues. Estate of
Taylor, noted at 159 Wash. App. 1003 (2010). As a result of the first appeal, the
parties returned to the trial court to litigate competing claims to the proceeds of a
Fidelity retirement account, three AIG life insurance policies and five
Northwestern Mutual life insurance policies.
The record shows that in 2003, William lost his job and Caiarelli began
divorce proceedings. William prepared a will directing that in the event of his
death, all of his assets were to be held in trust for his son. His brother Charles
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was named as the trustee. His father Reuben was named as the alternate
trustee, and his mother Emily was named as a second alternate.
The final decree dissolving William's marriage to Caiarelli was entered in
February 2005. William started working for a new company in July 2005. Also in
July 2005, William took the actions that are central to this dispute. He signed a
change of owner designation transferring ownership of the Northwestern Mutual
policies from himself to his father, Reuben. He rolled over the Fidelity retirement
account and named Charles as the primary beneficiary and Reuben as
contingent beneficiary. And he took out three AIG life insurance policies that
were available as a benefit of his new employment, again designating Charles as
primary beneficiary and Reuben as contingent beneficiary.
Two months later, William drowned.
During Charles' tenure as personal representative of William's estate,
Charles obtained for himself the proceeds of the AIG policies and the Fidelity
account. Reuben received the proceeds of the Northwestern Mutual policies.
Neither Charles nor Reuben took steps to fulfill trustee responsibility for the
testamentary trust William had created for his son.
Caiarelli brought suit against Charles to have a constructive trust
imposed upon these proceeds for the benefit of A.C.T. She claimed that despite
the appearance that the financial actions William took in July 2005 were for the
benefit of Charles and Reuben personally, William's actual intent as shown by his
will was for Charles and Reuben to hold the proceeds as trustees for A.C.T. Our
previous opinion reversed orders of summary judgment and remanded to permit
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Caiarelli to litigate the intent theory. When the case returned to the trial court
after the mandate issued on May 13, 2011, Caiarelli pursued an additional theory
of undue influence by Charles, Reuben, and Emily.
The case was tried to a jury from November 10 to November 30, 2011.
Emily was dismissed early in the trial. At the end of the plaintiffs case, the court
granted a motion to dismiss Reuben under CR 50(a). The defense rested
without making an opening statement or calling any witnesses. The jury
rendered a special verdict against Charles, finding that (1) William intended to
designate Charles as the beneficiary of the AIG policies and the Fidelity account
as trustee for A.C.T., not for his personal benefit, and alternatively (2) Charles
unduly influenced William to designate him as the beneficiary of the AIG policies
and the Fidelity account.
Charles moved for judgment notwithstanding the verdict. The trial court
denied the motion and entered judgment against Charles for the value of the
three AIG policies and the Fidelity account that should have been preserved for
A.C.T., the sum of $824,212.85, plus prejudgment interest, for a total judgment of
$1,422,077.54.
Charles appeals from the order denying his motion for judgment
notwithstanding the verdict. Caiarelli cross appeals from the orders dismissing
Emily and Reuben.
CHARLES' APPEAL
This court reviews the denial of a motion for judgment notwithstanding the
verdict de novo, applying the same standard of review as the trial court. Hizev v.
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Carpenter. 119 Wash. 2d 251, 271, 830 P.2d 646 (1992). "'A directed verdict or
judgment n.o.v. is appropriate if, when viewing the material evidence most
favorable to the nonmoving party, the court can say, as a matter of law, that there
is no substantial evidence or reasonable inferences to sustain a verdict for the
nonmoving party.'" Hizev, 119 Wash. 2d at 271-72. The moving party must prove
that there is no substantial evidence, or reasonable inference from that evidence,
which, viewed in a light most favorable to the prevailing party, supports the
decision made by the jury. Sing v. John L Scott. Inc., 134 Wash. 2d 24, 29, 948
P.2d 816 (1997).
Charles argues on appeal that no evidence was presented that William
intended anything other than what was on the documents themselves when he
typed in Charles' name as beneficiary on the AIG policies and the Fidelity
account. He is mistaken. As we said in our previous opinion that reversed
summary judgment for Charles on this issue, "a jury could conclude that William
intended to leave these assets to his son by entrusting them to his father and
brother in a representative capacity." Tavlor, noted at 159 Wash. App. 1003, 2010
WL 5464751, at *6. And now a jury has concluded exactly that. The jury
decision is supported by the following evidence:
• William's four wills executed from 2003 to 2004 leaving substantially all
of his assets to his son and nothing to his father or his brother.
• William's increasing concern after the divorce that Caiarelli would have
access to his assets in the event of his death.
• William's attorney Craig Coombs' testimony that, during the
preparation of two wills in 2003 and 2004 before the dissolution of his
marriage, William's intent was to leave all his assets to A.C.T., as
demonstrated by language expressly directing that that his estate hire
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an attorney to represent A.C.T. and to make sure all of William's
property was placed in a trust on behalf of A.C.T.
• Testimony of three people that the beneficiary forms were not worded
in such a way as to give William the option of indicating that Charles
and Reuben were named in their capacity as trustees for A.C.T.
• William's decision to name Charles as trustee of the trust to benefit
A.C.T. that was created in his will.
The trial court did not err in denying Charles' motion for judgment notwithstanding
the verdict on the intent claim.
The claim of undue influence by Charles was an alternative theory leading
to the same result as the intent theory. Charles assigns error to instruction 13,
which set forth the burden of proof on the claim of undue influence.
Instruction 13 equated the burden of proof for the beneficiary designations
on the Fidelity account and the AIG insurance policies with the burden of proof
for inter vivos gifts. This burden makes it easier for the challenger of the
designation to prove undue influence than the burden of proof for testamentary
designations. Which burden applies to beneficiary designations is an issue that
has not been decided in Washington, and it will remain undecided in this opinion.
The special verdict shows that the jury was unanimous as to the intent theory
and almost unanimous (11-1) as to the undue influence theory. Because there
was sufficient evidence to support the intent theory, we need not separately
analyze whether there was sufficient evidence to support the verdict on the claim
of undue influence by Charles. See Davis v. Microsoft Corp., 149 Wash. 2d 521,
539-40, 70 P.3d 126 (2003). As a result, we need not decide Charles' claim of
instructional error pertaining to undue influence.
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Caiarelli's claim was brought under the Trust and Estate Dispute
Resolution Act, chapter 11.96 RCW (TEDRA). The act provides a trial court with
discretion to order reasonable attorney fees. RCW 11.96A.150. The trial court
exercised its discretion to make a significant award to Caiarelli for attorney fees,
costs, and other expenses. Charles asks for reversal of the fee award in the
event the judgment against him is reversed. Because we are affirming the
judgment against Charles, we decline to disturb the award of attorney fees,
costs, and expenses against him. Charles requests attorney fees on appeal.
That request is denied.
Caiarelli requests an award of attorney fees on appeal against Charles.
That request is granted with respect to Charles' appeal, subject to compliance
with RAP 18.1.
CAIARELLI'S CROSS APPEAL
Caiarelli's cross appeal concerns the five Northwestern Mutual life
insurance policies that William assigned to Reuben shortly before his death.
Before the first appeal, the trial court awarded these policies to Reuben on
summary judgment. We reversed, noting that Reuben's motion for summary
judgment had been granted even though Reuben was not yet a party to the
action, Caiarelli had not yet laid claim to the policies, and there had as yet been
no discovery directed toward the question of whether they were estate assets.
Tavlor. 2010 WL 5464751, at *6-7.
On remand, the necessary procedural steps were taken so that Caiarelli
could pursue A.C.T.'s claim to the proceeds of the five Northwestern Mutual
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policies. Caiarelli's theory was that the transfer of ownership of the policies to
Reuben was the result of undue influence exerted by William's parents working in
concert. The ownership of these policies, which had a combined death benefit of
$204,000, was not addressed in the final judgment as the result of Reuben's
dismissal. The proceeds remained in the hands of Reuben as his personal
property. Caiarelli cross appeals from the decisions to dismiss Reuben and
Emily.
PROCEDURAL ISSUES
We must first decide whether the cross appeal is properly before us.
Reuben and Emily, represented by the same attorney as Charles, moved to
dismiss the cross appeal after Caiarelli filed her brief of respondent/cross
appellant.
The Taylors first contend Caiarelli's cross appeal was untimely because it
was filed more than 30 days after they were dismissed.
The court dismissed Emily on November 17, 2011, on a motion for partial
summary judgment decided at the beginning of the trial. The court dismissed
Reuben on November 28, 2011, on a motion under CR 50(a) at the end of
Caiarelli's case. The court entered the final judgment against Charles, the only
remaining respondent, on December 20, 2011.
Generally, a notice of appeal must be filed within 30 days of the entry of
the order appealed. RAP 5.2(a). Reuben and Emily contend Caiarelli's appeal is
too late because Caiarelli filed her notice of cross appeal more than 30 days after
the entry of the trial court's orders dismissing them. We disagree. Caiarelli is
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No. 68222-9-1/9
entitled to review under RAP 2.4(b). Under that rule, the appellate court may
consider an order or ruling not designated in the notice of appeal if: "(1) the order
or ruling prejudicially affects the decision designated in the notice, and (2) the
order is entered, or the ruling is made, before the appellate court accepts
review." See Fox v. Sunmaster Prods., Inc., 115 Wash. 2d 498, 798 P.2d 808
(1990). We see no reason to depart from this rule. To dismiss the cross appeal
would make the pertinent rules exactly the same kind of '"trap for the unwary,'"
Fox, 115 Wash. 2d at 505, quoting Adkins v. Aluminum Co. of Am., 110 Wash. 2d 128,
134, 750 P.2d 1257, 756 P.2d 142 (1988), that the rule was designed to avoid,
and it would also encourage piecemeal appeals. We conclude the cross appeal
is timely.
The Taylors next contend the appeal must be dismissed because they
were not notified that their interests could be affected by Caiarelli's appeal from
the final judgment. They rely on language from In re Saltis, 25 Wash. App. 214,
219, 607 P.2d 316, affd, 94 Wash. 2d 889, 621 P.2d 716 (1980). In Saltis, the sole
issue on appeal was "whether service by mail on the Department of Labor and
Industries building containing the Director's office is sufficient to satisfy RCW
51.52.110." Saltis, 25 Wash. App. at 216. In finding service by mail sufficient, the
court noted that the "general purpose of a notice of appeal is to inform the party
in whose favor a judgment or decree has been rendered that the unsuccessful
party desires a review of the case by a higher tribunal." Saltis, 25 Wash. App. at
219.
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While the final judgment does not mention Reuben or Emily, Caiarelli's
notice of cross appeal from that judgment adequately informed them that their
dismissals were subject to further review. The notice was received by the
attorney who represents them. An appeal from a final judgment brings up for
review earlier orders, in this case including the orders of dismissal and related
evidentiary rulings. Fox, 115 Wash. 2d at 505. Reuben and Emily were not entitled
to any particular notice other than the notice of cross appeal from the final
judgment.
We deny the motion to dismiss Caiarelli's cross appeal. Caiarelli argues
that the motion to dismiss is frivolous and that sanctions are warranted. We deny
the request for sanctions.
DISMISSAL OF REUBEN
We now consider the cross appeal on the merits. We first address the trial
court's decision to dismiss Reuben. At the end of Caiarelli's case, the court
granted Reuben's motion for judgment as a matter of law that the evidence was
insufficient to support the claim of undue influence.1 Later, during the
instructions conference, the court also dismissed the intent claim against
Reuben, resulting in his dismissal as a party. On appeal, Caiarelli argues that
the trial court should have allowed the undue influence claim against Reuben to
go forward with respect to the Northwestern Mutual policies.
This court reviews the decision to grant a motion for judgment as a matter
of law de novo, applying the same standard as the trial court. Davis, 149 Wn.2d
1Clerk's Papers at 758-66.
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No. 68222-9-1/11
at 530-31. Judgment as a matter of law is appropriate where viewing the
evidence most favorable to the nonmoving party, the court can say, as a matter
of law, there is no substantial evidence or reasonable inference to sustain a
verdict for the nonmoving party. Davis, 149 Wash. 2d at 531. Substantial evidence
is that which would be sufficient to persuade a fair-minded, rational person of the
truth of a declared premise. Davis, 149 Wash. 2d at 531.
Undue influence is that influence which, at the time of the testamentary
act, controlled the volition of the testator, interfered with his free will, and
prevented an exercise of his judgment and choice. In re Estate of Lint, 135
Wash. 2d 518, 535, 957 P.2d 755 (1998).
When a challenged gift is testamentary in nature, the challenger bears the
burden of proving the existence of undue influence. In re Estate of Melter, 167
Wash. App. 285, 299, 273 P.3d 991 (2012); White v. White, 33 Wash. App. 364, 370-
71, 655 P.2d 1173 (1982). But when the challenged gift is inter vivos—a present
gift made during the donor's lifetime—and the person attacking the gift
establishes that a confidential relationship existed between the donor and the
donee, the burden shifts from the challenger to the donee to show the absence of
undue influence. Melter, 167 Wash. App. at 296. The rationale for the difference in
burdens is the increased skepticism with which society views inter vivos gifts as
opposed to testamentary transfers. A testamentary transfer is revocable; that is,
a will can be changed. But a gift is irrevocable. A donor who makes a gift while
alive "'strips himself of that which he can still enjoy and of which he may have
need during his life; while by his will he disposes of that which can be of no
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No. 68222-9-1/12
further use to him. As he is, under ordinary conditions, so much the less likely to
do the first than the second, courts subject gifts to the sharper scrutiny.'" Whalen
v. Lanier, 29 Wash. 2d 299, 312, 186 P.2d 919 (1947) (internal quotation marks
omitted), quoting Mever v. Campion. 120 Wash. 457, 207 P. 670, 674 (1922).
The transfer of ownership of the five Northwestern Mutual policies is
subject to sharp scrutiny because it was an inter vivos gift, not testamentary in
nature. Reuben had originally purchased these policies for William. When
William turned twenty-one, he became the owner of the policies. The dissolution
decree distributed ownership of the policies to William. As the trial court fully
understood, it was important for Caiarelli to prove the existence of a fiduciary or
confidential relationship between Reuben and William because if she did so, the
burden would be on Reuben to prove he did not exert undue influence on
William.
When the case against Charles went to the jury, the trial court defined
"fiduciary" and "confidential" in instruction 15, to which no error has been
assigned. "A fiduciary relationship exists whenever one person occupies such a
relation to the other party as to justify the latter in expecting that his interest will
be cared for. A confidential relationship means (1) that a family member reposes
some special confidence in another relation's advice and (2) that the relation
purports to advise with his family member's interests in mind." Instruction 15
properly stated the law. See, e.g., McCutcheon v. Brownfield, 2 Wash. App. 348,
356-57, 467 P.2d 868, review denied. 78 Wash. 2d 993 (1970). It is equally
applicable to the case against Reuben.
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No. 68222-9-1/13
The trial court ordered Caiarelli to make a proffer of whatever evidence
she had to prove that Emily, Reuben, or Charles had any contact with William
from the time of his divorce in February 2005 to the time the beneficiary
designations were made in July 2005. The written proffer was to be served
before opening statements on November 16, 2011, and if it was not, the court
would consider striking the claim altogether.2
At the end of the trial, the court determined there was insufficient evidence
that Reuben had given William any advice or had any contact that would prove
the existence of a confidential relationship. The trial court stated there was "not a
scintilla of evidence" that William had contact with Reuben around the time he
transferred the ownership of the Northwestern Mutual policies to Reuben.3
Exclusion of the Ainsworth Testimony
In this context, Caiarelli raises a critical assignment of error to the
exclusion of testimony by Caiarelli's sister Amy Ainsworth. The excluded
testimony provided evidence that William's Chicago-based parents were in close
and constant touch with him by telephone during the time in question.
In a pretrial disclosure of witnesses, Caiarelli stated that Ainsworth and
her husband Brian would testify about their friendship with William, their
knowledge of his mental health challenges, their knowledge of his love for his
son, and their knowledge about William's relationship with Charles and Reuben.4
2 Report of Proceedings (Nov. 15, 2011) at 17-20; Report of Proceedings (Nov.
17, 2011) at 85.
3 Report of Proceedings (Nov. 23, 2011) at 102; Clerk's Papers at 46-48.
4 Report of Proceedings (Nov. 17, 2011) at 72.
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No. 68222-9-1/14
Ainsworth discussed how happy William was to have a family and how he
was overjoyed when his son was born. She talked about the Caiarelli family
parties that William attended and the significant and apparently meaningful
relationships he had with members of Patricia's family. She testified that after
the dissolution proceedings began, William became withdrawn in demeanor and
refused all invitations.
After the jury was released on November 16, Ainsworth disclosed to
counsel for Caiarelli for the first time a conversation she had with Emily, with
Rueben also present. Rueben and Emily had come out from Chicago after
William's death. The conversation occurred on the doorstep of William's house
as the Taylors were cleaning it out; Ainsworth was there to pick up some
personal items for A.C.T. Ainsworth said Emily became agitated and told them
she had nightly, hour-long phone calls with William from the time of his
dissolution in February 2005 until his death in September 2005.5
Caiarelli immediately notified opposing counsel of this development. The
next morning, Caiarelli asked the court to admit the testimony. She suggested
that opposing counsel be allowed to depose Ainsworth that evening and that
Ainsworth be allowed to complete her testimony the following day.
The Taylors objected on the basis of unfair surprise. The court agreed
that the issue was significant but nevertheless decided that the disclosure was
untimely, given Caiarelli's failure to make a written proffer of the specific
testimony about the doorstep conversation. The court framed the problem as
5 Report of Proceedings (Nov. 17, 2011) at 13; Exhibit 67.
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No. 68222-9-1/15
noncompliance with a discovery order and analyzed it in terms of Burnet v.
Spokane Ambulance. 131 Wash. 2d 484, 494, 933 P.2d 1036 (1997). The court
found that admitting the evidence would cause "great prejudice" to the
respondents.6 The court determined that there had been a willful violation of the
court's order requiring disclosure of evidence of undue influence and no lesser
sanction than exclusion of the evidence would suffice:
It's clear that the respondents did not have any notice of the
testimony of Amy Ainsworth and that, in fact, if asked directly, the
petitioner would have said that they didn't know of any such
evidence. And I believe that petitioner's attorneys do have a duty
to make an inquiry.
So the first question I ask is, is there a lesser sanction that I
could impose, lesser than some kind of striking of evidence, and
could I ameliorate the prejudice in some way. And I think those
questions are obviously combined.
I could order a deposition, as suggested by Mr. Kimbrough.
The trial is ongoing, questions have already been asked of
witnesses. And even with a deposition, I think there is great
prejudice to a party who has already stated, and I think it's fair to
state, did not know the undue influence claim was even coming
down the road.
There is investigation that could have been done, the kind of
which I have actually afforded in another context, another trial, the
kind of remedy that might to recess the trial for a brief time. But
that's an extraordinary remedy, simply not appropriate, and there is
not enough time in this trial with a jury.
So there are three sanctions that I could impose. I could
strike the entire claim of undue influence. I could strike the two
witnesses disclosed, Patrick Caiarelli and Amy Ainsworth, in their
entirety. Or I could strike the testimony only of the event at issue. I
think those are the only three sanctions left to me, since it's simply
impossible at this time to start engaging in discovery in this six-
year-old case.
It's a difficult decision, as I said, because it's relevant
evidence. But I'm persuaded that the least sanction I can impose is
to strike the evidence of the conversation Ms. Ainsworth and Mr.
Caiarelli say that they had with Emily Taylor after the death of
William Ross Taylor that is in Exhibit 67.
6 Report of Proceedings (Nov. 17, 2011) at 17.
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Finally, was this a willful violation? I think willful doesn't
mean did the parties intentionally try to hide information. I think in
this context it means did they violate a duty they had under the civil
rules to investigate and disclose witnesses' testimony relevant to
claims.
I think that there is really no question here. It's admitted that
they didn't even know or didn't ask the witness and couldn't have
even answered an interrogatory directly had they - had it been
asked, because they simply didn't ask the witness that information
and didn't fully disclose it for that reason. So I'm persuaded that
there is a willful violation.171
Caiarelli argues that exclusion of Ainsworth's testimony about her
doorstep conversation with Emily Taylor was error. We agree.
A trial court has broad discretion regarding the choice of sanctions for
violation of a discovery order. However, to exclude testimony as a sanction is an
abuse of discretion absent a showing of intentional nondisclosure, willful violation
of a court order, or other unconscionable conduct. Burnet. 131 Wash. 2d 484, 494,
933 P.3d 1036 (1997). When a trial court chooses one of the harsher remedies
under CR 37(b), it must be apparent from the record that the court explicitly
considered whether a lesser sanction would have sufficed and whether "the
disobedient party's refusal to obey a discovery order was willful or deliberate and
substantially prejudiced the opponent's ability to prepare for trial." Burnet. 131
Wash. 2d at 494; Jones v City of Seattle. 179 Wash. 2d 322, 338, 314 P.3d 380 (2013).
A willful nondisclosure is one "done without a reasonable excuse."
Snedigar v. Hoddersen. 114 Wash. 2d 153, 169, 786 P.2d 781 (1990). Cases
finding no reasonable excuse deal with situations where the nondisclosure was
knowing and intentional. See, e.g.. State v. Hutchinson. 135 Wash. 2d 863, 882-83,
Report of Proceedings (Nov. 17, 2011) at 86-88.
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959 P.2d 1061 (1998) (finding willfulness where defendant repeatedly and
knowingly refused to undergo a court-ordered CR 56 evaluation), cert, denied,
525 U.S. 1157 (1999): Magana v. Hyundai Motor Am.. 167 Wash. 2d 570, 584, 220
P.3d 191 (2009) (responses which are knowingly false, misleading, and evasive
are willful violations); Rivers v. Wash. State Conference of Mason Contractors.
145 Wash. 2d 674, 686-87, 41 P.3d 1175 (2002) (responses which are knowingly
incomplete are willful violations).
Ainsworth had been disclosed as a witness with knowledge of William's
relationship with his parents. The Taylors did not depose her. They cite no
authority for the proposition that surprise testimony coming from a disclosed
witness amounts to a willful violation by the proponent of the testimony. Caiarelli
had a reasonable excuse. Ainsworth did not disclose the conversation to
Caiarelli's attorneys until she had already given some testimony and they were
preparing her to continue her testimony on the next day. The trial court accepted
that there had been no intentional hiding of information.
This record does not establish a willful violation, nor does it show the
degree of prejudice that would justify excluding highly relevant testimony. There
is no reason apparent on the record why it would not have been sufficient to
permit defense counsel to depose Ainsworth that evening and have her complete
her testimony later. See Deutscher v. Gabel. 149 Wash. App. 119, 125-30,202
P.2d 355 (2009). Ainsworth was only the third witness. The witness who might
contradict her account of the doorstep conversation, Emily Taylor, had not yet
testified. When Emily did testify several days later, she admitted to having a
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No. 68222-9-1/18
heated conversation with Caiarelli's sisters while cleaning out William's home but
denied saying anything about daily, hour-long phone calls with William up until
the day he died.8
We conclude it was error to exclude the Ainsworth testimony.
Other Evidence of Undue Influence
There was no direct evidence presented that Reuben himself talked to
William during the four or five months leading up to William's transfer of
ownership of the Northwestern Mutual policies. However, undue influence may
also be proven by circumstantial evidence. In re Estate of Riley. 78 Wash. 2d 623,
647, 479 P.2d 1 (1970). The record contained substantial circumstantial
evidence from which the jury might have inferred that William had a long standing
and continuing confidential relationship with his parents, that they were deeply
involved in his financial affairs, and that he was susceptible to their influence.
Emily testified that not long after William and Caiarelli's separation in April
2003, she came out to Seattle several times to be with William and help him "get
away from the deep sadness he had."9 Exhibit 6, a set of police reports, shows
that William was particularly distraught and erratic in behavior during the month
of August 2003. William's business attorney, Jack Borland, twice reported to
police that William was missing. On one occasion William was located at
Harborview, where he had turned himself in. On another, he was found in
Woodinville sleeping in his car.
8 Report of Proceedings (Nov. 21, 2011 p.m.) at 86-87.
9 Report of Proceedings (Nov. 21, 2011 p.m.) at 45.
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No. 68222-9-1/19
Borland was in touch with Reuben and Emily.10 He expressed to them his
concern that William, despite being in the midst of a heated divorce, was making
provisions for Caiarelli in his will.11 Reuben and Emily came out to look after
William. They stayed with him and contacted police twice about his behavior.
On August 29, 2003, Reuben called the police to report that William had
taken Reuben's briefcase and would not return it. The police officer who
responded reported that he "immediately recognized" that William "was not of
sound mind." The officer persuaded William to return Reuben's briefcase. The
police report states, "Reuben told me that he wanted the incident documented so
that the Kirkland Police would have some insight into William's behavior if they
were to come into contact with him in the future. Reuben told me that he would
continue to work with William's lawyer and doctor in hopes that William would get
the help he needs to regain emotional well-being."
Reuben called the police to William's house again three days later,
September 1, 2003. The police report states that William was "very agitated and
nervous upon contact. . . . William explained that his parents are trying to take
control of his life and assets. He said that he knows he's experiencing difficulties
and that he wants to work with his father, but his father is going about it the
wrong way. He said that his father tried to leave with some important papers of
10 Borland is the attorney who prepared William's first two wills. He later served
as attorney for Charles when Charles was personal representative of the estate and at
the same time represented Charles personally in this action. Clerk's Papers at 490.
11 Report of Proceedings (Nov. 21, 2011 p.m.) at 52-53; see also exhibit 6
(Borland tells police that William's estate planning is "unusual" and he is "not thinking
correctly.") In the wills prepared by Borland, William provided for Caiarelli to have an
income equal to court-ordered child support and directed that she be allowed to live in
his house, which was his separate property, ifA.C.T. lived with her.
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his today, and that he decided he'd take his father's luggage until he gave the
papers back."12
Emily filed a petition for William's guardianship on September 4, 2003.13
Emily declared her extreme concern for William's mental health and his financial
actions.14 Two weeks later, Emily hired and paid attorney Craig Coombs to help
William defend himself against the guardianship. The guardianship was settled
in November 2003. William signed a stipulation requiring him to give power of
attorneyto Charles (and alternatively, Reuben) to act for him if he disappeared.15
In 2004, there was a mediation in the dissolution action. Emily attended it.
She came out to Seattle in December 2004 and stayed more than a month. She
also attended almost every day of the dissolution trial. After the dissolution
became final in February 2005, Emily talked on the phone with William as much
as twice a week based on her own testimony.16
During Emily's trial testimony on November 21, 2011, she described
William as independent and self-motivated and she professed a lack of
knowledge about many of the details in the police reports. However, she also
testified that she filed the guardianship petition in part because William's assets
"were being used up very fast."17 She acknowledged the statement in her
declaration in support of the guardianship wherein she stated, "I seek ... to
mitigate the damages of my son's present incapacity by assisting with the
12 Exhibit 6.
13 Exhibit 7
14 Exhibit 8.
15 Exhibit 56.
16 Report of Proceedings (Nov. 21, 2011 p.m.) at 57. Based on the Ainsworth
testimony, the phone calls were daily and hour-long.
17 Report of Proceedings (Nov. 21, 2011 p.m.) at 79.
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No. 68222-9-1/21
temporary management of finances by paying bills and obligations that are now
seriously past due, including the obligation to pay temporary child support." She
testified, "We were willing to give him every help we could."18 And she testified
that through the entire period of the dissolution from 2003 to early 2005, she and
Reuben gave William considerable financial assistance "when he seemed to
need money or asked for it,"19 including for health insurance coverage and a car.
Although she characterized the money as "loaned" rather than "given," she also
said that they "never discussed repayment at all."20
Reuben testified that he did not recall having discussions with William
about estate planning. Reuben was the alternate on the power of attorney
William gave to Charles in the stipulation ending the guardianship. William had
named Reuben the alternate personal representative of his estate, the alternative
trustee for A.C.T.'s testamentary trust, and the alternate guardian for A.C.T. if
both Caiarelli and Charles were unable to serve. Reuben testified that he was
unaware of these designations. The Taylors argue, without citing authority, that
these instruments do not evidence a fiduciary relationship because the members
of the Taylorfamily never invoked them. We disagree and hold that William's
repeated designation of his family members to act as fiduciaries is evidence of
the special confidence he placed in their advice.
Reuben also testified that he had given William business advice in the
past and had loaned him money when he was unemployed. At the end of his
18 Report of Proceedings (Nov. 21, 2011 p.m.) at 82.
19 Report of Proceedings (Nov. 22, 2011 a.m.) at 57.
20 Report of Proceedings (Nov. 22, 2011 a.m.) at 42, 47.
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No. 68222-9-1/22
testimony Reuben was asked whether he could think of anyone in William's life
besides the Taylor family that William trusted. His answer was "I can't name
anyone specifically, no."21
In the trial court's view, Caiarelli's effort to establish the existence of a
confidential relationship between William and his parents at the time he
transferred the policies consisted solely of Emily's testimony that she
occasionally talked to William on the phone and an inference that Emily must
have talked to Reuben about William.22 This is an overly constricted view of the
evidence. A jury could reasonably infer that Reuben and Emily worked together
to help William manage his finances and that he trusted their advice. A jury
could also infer that Reuben and Emily believed their interference and influence
was necessary to ensure that William put his assets under the control of the
Taylor family. Ajury could reasonably infer that that was one of the purposesfor
having Emily attend the mediation and trial of the dissolution.
In short, the evidence was sufficient to allow a jury to find the existence of
a confidential relationship that would shift the burden to Reuben to prove that he
did not unduly influence William.
Even if the jury did not find the existence of a burden-shifting confidential
relationship, and the burden remained on Caiarelli to prove undue influence, the
evidence was sufficient to present a jury question. Where a challenger can show
a combination of suspicious facts and circumstances, a presumption against
validity may arise. Dean v. Jordan. 194 Wash. 661, 671-72, 79 P.2d 331 (1938).
21 Report of Proceedings (Nov. 22, 2011 p.m.) at 24.
22 Report of Proceedings (Nov. 23, 2011) at 102-03.
22
No. 68222-9-1/23
Ifthe presumption arises, it may be rebutted by the donee with "evidence
sufficient at least to balance the scales and restore the equilibrium of evidence
touching the validity of the will." Dean. 194 Wash, at 672.
How the jury could have applied this law to Reuben is illustrated by the
instruction the trial court gave for the undue influence claim against Charles.
Instruction 16 allowed the jury to consider eight factors drawn from Dean and
similar cases:
In deciding whether or not Charles Taylor exercised undue
influence over William Ross Taylor when William Ross Taylor made
his beneficiary designations, you may consider the following
factors:
(1) whether Charles Taylor occupied a fiduciary or confidential
relationship to William Ross Taylor;
(2) whether Charles Taylor actively participated in the preparation
or designation of William Ross Taylor's life insurance beneficiaries
or IRA beneficiary;
(3) whether Charles Taylor received an unusually or unnaturally
large part of the estate. You may also consider:
(4) the age or condition of health and mental vigor of William Ross
Taylor
(5) the nature or degree of relationship between William Ross
Taylor and Charles Taylor;
(6) the opportunity for exerting an undue influence,
(7) the naturalness or unnaturalness of the will. Whether a
beneficiary designation is natural or unnatural is a question to be
determined in each case as warranted by the facts. In the
determination of the question of what is unjust or unnatural, the
history of the donor's family is to be considered and the moral
equities and obligations appearing therefrom. A gift or transfer is
unnatural when it is contrary to what the donor, from his known
views, feelings and intentions, would have been expected to make.
(8) the availability or unavailability of independent advice.
The evidence presented at trial supports the majority of these factors with
respect to Reuben:
• Confidential Relationship: The evidence supported this factor; see
discussion above.
23
No. 68222-9-1/24
• Participation in Preparation of Documents: There is no direct evidence
that Reuben participated in William's submission of the change of
owner designation.
• Unusual or Unnatural Part of the Estate: Exhibit 203 is a pie chart that
was admitted to give a rough idea of the distribution of William's
assets. It showed that 53 percent went to Charles, 14 percent went to
Reuben, 15 percent were assets deposited to the estate account, and
18 percent in other categories. The five policies paid out to Reuben
had a total value of $204,000. A jury could conclude that Reuben
received an unusual or unnatural part of William's assets.
• Condition of Health and Mental Vigor: A jury could find that William's
mental health and vigor was at a low ebb considering his erratic
behavior beginning in fall 2003 and extending through to his death.
• Relationship to Beneficiary: Reuben and Emily assisted William
financially and emotionally, and there was no one else in his life he
trusted more.
• Opportunity to Exert Undue Influence: Reuben and Emily worked in
concert to make sure the assets William had accumulated did not get
"used up" by Caiarelli. Emily spent a great deal of time with William
personally during the dissolution proceedings and attended the
mediation and the trial. Afterward, she was on the phone with him
regularly.
• Naturalness of the Gift: The transfer of a valuable asset to his father,
who did not need it, was unnatural considering he had a young son.
• Availability of Independent Advice: William could have obtained
independent advice. Attorney Craig Coombs, who prepared the will,
testified that he expected William to come back to revisit his estate
plan when the dissolution was over and the distribution of property was
final.
Not all of the factors need be present in order for undue influence to be
established. See Dean, 194 Wash, at 671-72; In re Estate of Haviland, 162 Wn.
App. 548, 560, 255 P.3d 854 (2011).
24
No. 68222-9-1/25
The record offers competing narratives of what was going in William's mind
when he made a gift to Reuben of the five Northwestern Mutual policies. A jury
could find that he independently decided to benefit Reuben rather than A.C.T. But
a jury could also find that William was deeply troubled, increasingly isolated, and
highly susceptible to the idea that transferring the assets to the Taylor family would
ensure that they were held for the benefit of A.C.T. and out of the reach of his ex-
wife. Evaluating this dispute presents factual questions. The task should not have
been taken from the jury. We conclude the trial court erred by dismissing the
undue influence case against Reuben at the end of the petitioner's case.
Exclusion of Reuben's Deposition Testimony
Caiarelli has assigned error to the exclusion of Reuben's deposition.
Although resolution of the issue is not necessary to decide this appeal, we
address it briefly in case it arises again on remand.
The deposition appears to have been included inadvertently in exhibit 28.
Exhibit 28 includes evidence relating to the removal of Charles as personal
representative of William's estate. The trial court's intention was to exclude such
evidence because there was a settlement among the parties that resolved issues
arising from Charles' mishandling of the estate. For unexplained reasons, exhibit
28 also included Reuben's deposition (which took place much later) and some
other unrelated pieces of evidence. As Caiarelli points out, the settlement
agreement does not justify the exclusion of Reuben's deposition. But the record
does not demonstrate that the exclusion of Reuben's deposition was purposeful
or that the problem was ever brought to the trial court's attention. The deposition
25
No. 68222-9-1/26
was published and portions of it were used during the examination of Reuben as
a witness at the trial. Caiarelli fails to establish error. On remand, the parties are
free to offer Reuben's deposition.
DISMISSAL OF EMILY
We next address whether the trial court erred by dismissing William's
mother Emily as a party to the case.
Emily was an alternate trustee of the testamentary trust William created
for the benefit of A.C.T. Like Charles and Reuben, she did nothing to fulfill the
duties of a trustee. Unlike Charles and Reuben, however, Emily did not
personally receive proceeds from any account or policy at issue in the litigation.
On this basis, she asked the court to dismiss her. The court agreed that Emily
was not a necessary party.
In determining whether a party is necessary to an action, "the court must
decide whether the party's absence from the proceedings would prevent the
court from affording complete relief to the existing parties and whether the party's
absence would impair that party's interest or subject any existing party to
inconsistent or multiple liability." Cordova v. Holwegner. 93 Wash. App. 955, 961-
62, 971 P.2d 531 (1999). Here, the court anticipated imposing a constructive
trust over the disputed assets ifthe jury's verdict was for Caiarelli. The court
reasoned that if Caiarelli prevailed in establishing a constructive trust over the
assets at issue, she would be able to obtain complete relief even if Emily was not
a party.23
23 Report of Proceedings (Nov. 17, 2011) at 81-82.
26
No. 68222-9-1/27
In the present posture of the case, the only assets still at issue are the five
Northwestern Mutual policies. Reuben purchased these policies for William one
at a time beginning when he was in the third grade. Reuben and Emily were
designated as the primary beneficiaries of the policies. Caiarelli contends
Emily's status as a named beneficiary makes her an interested party and
requires that she stay in the case. We agree.
The terms of the policies permitted the owner of the policy to change the
beneficiary after the death of the insured. After William died, Reuben exercised
this power and changed the beneficiaries from himself and Emily to just himself.
The Taylors contend that ifthe transfer to Reuben is set aside on grounds of
undue influence, Emily will remain a rightful beneficiary as she was before the
transfer.24 This contention alone shows that Emily must remain a party; if
Reuben's ownership of the policies is set aside, she intends to claim an interest
in the proceeds.
Caiarelli contends the transfer of ownership to Reuben was the product of
undue influence by Reuben and Emily jointly to get William to put his assets
under the control of the Taylor family where Caiarelli would not be able to get at
them. The change of ownership did achieve that objective, as it was irrevocable.
And there was ample circumstantial evidence that Emily and Reuben acted in
concert with respect to their involvement in William's personal and financial
affairs. Thus, Caiarelli contends that if the transfer was the product of undue
influence by Emily and Reuben, any interest that either of them has in the
24 Appellant's Reply Brief at 39.
27
No. 68222-9-1/28
proceeds should be subjected to a constructive trust on behalf of A.C.T., in
accordance with the directive in William's will. This argument also supports
keeping Emily in as a party, to ensure that the final order in the case will be
enforceable against both Reuben and Emily.
We conclude the order dismissing Emily must be reversed.
Caiarelli requests an award of attorney fees and costs against Reuben
and Emily for the cross appeal. The statute under which the action was brought
permits an appellate court to award attorney fees. RCW 11.96A.150. When
considering a fee request under a statute that authorizes an award of attorney
fees to a prevailing party and further proceedings are necessary in the trial court
to determine who will finally prevail, this court will often remand the request to the
trial court and let the request abide the result there. But RCW 11.96A.150 is not
a prevailing party fee statute. The discretion it affords is broad, permitting an
award in such amount "as the court determines to be equitable" after considering
any and all factors that the court "deems to be relevant and appropriate." RCW
11.96A.150. We exercise our discretion to order Reuben and Emily to pay
Caiarelli's costs and reasonable attorney fees for the cross appeal. As between
them and A.C.T, they have the greater ability to pay. It is equitable that they
rather than he should bear the cost of reinstating them as parties. Their defense
of the undue influence claim is not frivolous and they may yet prevail, but the
record reflects that when they have had a choice between serving the interests of
A.C.T. or their own interests, they have chosen their own interests. In these
circumstances, the equities are with William's child, not with his parents.
28
No. 68222-9-1/29
The jury verdict is affirmed. The award of attorney fees against Charles is
affirmed. The orders dismissing Reuben and Emily are reversed. Attorney fees
are awarded against Charles for the appeal and against Reuben and Emily for
the cross appeal.
S?ofe>i
WE CONCUR:
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