August 25, 2016

Probate Orders

Probate participants naturally appreciate consistency. If a judge rules one way in a case in 2016, then presumably that ruling will apply in 2017 as well even if the case is before a different judge. "For one superior court judge, no matter how well intended, even if correct as a matter of law, to nullify a duly made, erroneous ruling of another superior court judge places the second judge in the role of a one-judge appellate court." In re Alberto (2002) 102 Cal.App.4th 421, 427. Hence, it is error for a judge to modify a prior ruling unless there are highly persuasive reasons to do so.
People v. Riva (2003) 112 Cal.App.4th 981, 992.

Here in Santa Clara Co., we have had 3 probate judges the past couple of years, Judge Cain, Judge Persky and Judge Kuhnle. Thus it is not a given that the same judge will hear your matter for the duration of your case. Personally speaking, I've had a couple of probate matters in which the judicial assignment changed during the case.

For illustrative purposes, assume a disgruntled beneficiary petitions the court to order that the trustee provide an accounting. The judge orders the trustee to provide an accounting to the court in 4 months. Furthermore, if the accounting is acceptable, the trustee will be released from having to provide an annual accounting to the court. The beneficiary does not object to any portion of the order. Hence, the accounting would be a one-off matter. The judge who signs this order then retires and a new judge takes over the case.

Months later, the trustee files an accounting with the court. The judge is satisfied with the accounting and approves it. However, the disgruntled beneficiary vigorously argues that the trustee should be subject to ongoing court supervision on the day of the hearing. The beneficiary provides only oral testimony that the trustee "can't be trusted" because the trustee once made a bet against the Harlem Globetrotters as he believed the Washington Generals were "due." Despite the previous order that barred ongoing court supervision, the new judge agrees with the disgruntled beneficiary and orders that the trustee provide an annual accounting to the court. The trustee is well within his or her rights to appeal the order in that it directly contradicts the prior order. 

August 11, 2016

Enforcing a Court Order Through an Elisor

The vast majority of lawsuits are settled. I have read that 95% of lawsuits do not end up being decided by a judge or jury but rather through settlement.  Still, just because you have a settlement agreement, this does not necessarily mean that your matter is over. Yes your case continues.........

Settlement agreements are not self-executing. Each party to a settlement agreement is required to perform certain conditions by certain times. For example, this could entail signing a document by the end of the month, paying a debt on the 1st of the month, turning over an item to a specific party immediately or filing documents within 6 months. The potential list of conditions that could be included in a settlement agreement are ostensibly limitless. The practical limitations are one's creativity and the willingness to agree to certain terms. 

Unfortunately one party to a settlement agreement may balk at performing their side of the deal (for meritorious or idiotic reasons). In such a case, the non-breaching party can ask the court to appoint an "elisor." See Blueberry Properties, LLC v. Chow (2014) 230 Cal.App.4th 1017, 1020-1021. If a party "will not or cannot execute a document necessary to carry out a court order, the clerk of the court, or his or her authorized representative or designee may be appointed as an elisor to sign the document." (Super. Ct. San Diego County, Local Rules, rule 2.5.11.)

A recent unpublished appellate opinion highlighted how an elisor was used to execute a settlement agreement.

Bajan et al. v. Mikos et al., San Diego County Superior Court Case # 37-2008-00094754-CU-FR-CTL

A dispute arose over the ownership of a property. Eventually, after years of litigation, the parties came to a settlement agreement. One of the conditions of the settlement was that the defendants would sign deeds in conformity with the settlement agreement. Simple enough you could say.

However the defendants refused to sign the deeds. The plaintiffs then asked the court to appoint an elisor to sign the deeds in place of the defendants. The court obliged and appointed the San Diego County Superior Court Clerk to sign the deeds, who did so.

The basis of the appeal was unrelated to the appointment of the elisor. 

July 27, 2016

Settlement Agreement in a Trust Dispute

Santa Clara Co. Superior Court
Gregge v. Hugill (2016) ___ Cal.App.4th _____
In Santa Clara County Superior Court, a disgruntled beneficiary challenged the validity of a trust amendment citing a lack of testamentary capacity and undue influence. The trust provided for multiple beneficiaries but there is only 1 contestant, the disgruntled beneficiary. Just prior to trial, another trust beneficiary agreed to file a disclaimer, conditioned upon the case being dismissed, that arguably undercut the remedy available to the disgruntled beneficiary. The trial court was agreeable to this, citing the importance of familial harmony, and dismisses the matter.

The disgruntled beneficiary then appeals and the appellate court finds reversible error, principally because the disclaimant was a non-party. The opinion noted "a settlement is an agreement among adverse parties, and Bennett did not agree to settle the case." Thus, it was improper for the trial court to dismiss the matter as it deprived the disgruntled beneficiary of the right to litigate the validity of the trust amendment.    

The opinion also notes how the settlor amended his survivor's trust multiple times. 

"In 1997, William amended the survivor’s trust, designating a fixed $900,000 to fund the grandchildren’s trust, to be distributed as stated in the 1990 trust instrument."

"In 2000, William amended the survivor’s trust by eliminating Michael’s five percent residual share and increasing Patrick’s share to 35 percent."

"In 2001, William removed Michael’s children Kathleen and Cameron as beneficiaries of the grandchildren’s trust, but he restored their status one year later."

"In 2005 William again removed Cameron as a grandchildren’s trust beneficiary."

"William executed a final amendment to the survivor’s trust on June 5, 2008, two weeks after he underwent surgery to remove a subdural hematoma. The 2008 amendment restored Michael as a trust beneficiary on equal footing with his siblings, and it restored Cameron as a grandchildren’s trust beneficiary on equal footing with his sister and cousins." 

I would not advise a client to amend their trust this many times unless they agree to a restatement of their trust. The reason being is that if a trust is amended, the heirs and beneficiaries are entitled to a copy of the trust and all the amendments. They could then see how the trust changed over time, possibly because of independent decision-making or the result of an interloper. If a restatement was used, only the restatement would need to be given to heirs and beneficiaries. Hence the heirs and beneficiaries could not piece together how the trust changed over time.

July 14, 2016

Undue Influence by a Child

A child is free to assist a parent with drafting their estate plan. However, a child cannot exert undue influence on the parent. A recent unpublished opinion involved the latter scenario for the late Elizabeth Plott.

The opening paragraph summarized the case as follows: 

"The probate court invalidated a trust amendment drafted by one of the beneficiaries—a lawyer who effectively disinherited her sibling. There is no credible evidence that the amendment manifests the intent of the beneficiaries' elderly mother. As the trial court found, the evidence "overwhelmingly establishes that the 2007 Trust Amendment is the product of undue influence."  

Key v. Tyler, Los Angeles Co. Superior Court Case # BP131447

The opinion did not present the child, Elizabeth Plott Tyler (appellant), a California attorney, and the estate planning attorney, Allan Cutrow, in a positive light. Tyler & Wilson was Ms. Tyler's law firm and MSK was Mr. Cutrow's law firm.

For example the opinion stated:

"Steege reiterated at trial that Mrs. Plott stated, more than once, that she did not trust appellant. This is because Mrs. Plott wanted to do things her way, but appellant "had her agenda" and would do things differently, which upset Mrs. Plott when she learned of it. Appellant recalled that Mrs. Plott balked at signing checks for appellant's legal bills, provoking appellant to "use[ ] my scary yelling tone." When appellant walked out of the meeting, Mrs. Plott signed the checks. At trial, appellant denied ever raising her voice at Mrs. Plott, which was contradicted by her deposition, when appellant answered, "Yes, I'm sure I did on some occasions."

Later in the opinion: 

"There is no shortage of evidence that appellant actually participated in the preparation of the Trust amendment in 2007, personally and by giving directions to others. Drafts prepared by MSK were sent to Tyler & Wilson, not to Mrs. Plott. During the drafting period, Cutrow did not communicate with Mrs. Plott in person, by telephone, by letter or by e-mail. In February 2007, appellant wrote to Cutrow, "After we left your office last time, my mother told me that she was okay with giving me a controlling interest in the business like we discussed, that she did not want to do that with my sister." Cutrow did not meet alone with Mrs. Plott, to confirm that the drafting instructions he received were what Mrs. Plott wanted, as opposed to what appellant wanted. Tyler & Wilson billing records show that appellant's employee Stajduhar attended both the presigning meeting and the meeting at which the Amendment was executed." 

The opinion mentioned that "the Plott nursing home businesses were sold for $55 million at a probate court auction." Due to the high-net worth of the trust estate, I would expect further appeals.

June 30, 2016

Attorney as Beneficiary of a Client's Estate (Don't do it!)

Santa Barbara County Courthouse
Attorneys can receive gifts from clients. For example, one client gave me cookies during the holiday season a few years ago. Attorneys, however, should generally never write a testamentary instrument that provides a "gift" of a client's estate to them. One attorney was recently found culpable in making this grievous mistake.

Butler v. LeBouef (2016) ___ Cal.App.4th _____

The published opinion's first paragraph provided a clear preview of how the appeal would be decided:

"An ethical estate planning attorney will plan for his client, not for himself. (See Estate of Moore (2015) 240 Cal.App.4th 1101, 1103.) A license to practice law is not a license to take advantage of an elderly and mentally infirm client. As we shall explain, the factual findings of the trial court compel the conclusion that appellant used his license to take advantage of an elderly and mentally infirm person to enrich himself. The trial court factual findings are disturbing, fatal to appellant's contentions, and suggest criminal culpability."

The trial court found that attorney John F. LeBouef had authored the will and trust of the late John A Patton and made himself the principal beneficiary to a $5 million estate. Naturally, the trust and will were invalidated.

The trial court also further found against attorney LeBouef:

"In a Supplemental Statement of Decision, the trial court factually found that appellant caused the loss of the original trust instrument, which made it impossible for the court to determine the true terms of the trust. The trial court declared the will and trust invalid and removed appellant as trustee. Appellant was ordered to turn over the trust assets and pay $1,256,971 attorney fees pursuant to section 21380, subdivision (d)."

The loss of the original trust instrument was highly suspicious. According to a footnote in the opinion, "on April 24, 2012, appellant reported that Patton's house was burglarized and that the burglar took the original trust document and a laptop computer used by appellant to prepare trust documents. The burglary occurred just before appellant was scheduled to produce the document for his deposition and a forensic examination. The police suspected it was a staged burglary because nothing else was taken and the house was made to look like it was ransacked. Expensive watches and art work were in plain sight but were not taken."

The opinion concluded:

"The clerk is directed to forward a copy of this opinion to the California State Bar (Bus. & Prof. Code, § 6103.6) and the district attorney for the County of Santa Barbara. We express no opinion on discipline and/or the decision to initiate criminal prosecution." 

I do not foresee this ending well for Mr. LeBouef..........

June 17, 2016

Amanuensis - Estate of Stephens

Can a person sign for somebody else on a document without their written authorization, e.g. on a deed? The answer is yes. The legal term for this is "amanuensis." See  Estate of Stephens (2002) 28 C4th 665.

In Estate of Stephens, the decedent orally instructed his daughter to sign his name on a grant deed which vested title in the decedent and the daughter as joint tenants. When the decedent passed away, the daughter argued that the property was hers because she was the surviving joint tenant. The son argued that the property should be divided equally between the son and daughter, as stated in decedent's will. 

The California Supreme Court ultimately ruled that the conveyance was valid, citing the amanuensis rule. It provides "that where the signing of a grantor's name is done with the grantor's express authority, the person signing the grantor's name is not deemed an agent but is instead regarded as a mere instrument or amanuensis of the grantor, and that signature is deemed to be that of the grantor." In this case, the daughter's signature "was a mere mechanical act, and not an exercise of judgment or discretion." The decedent told the daughter to sign the deed on his behalf and she did so.

Still, the opinion noted that "the signing of a grantor's name by an interested amanuensis must be presumed invalid. In such a case, the interested amanuensis bears the burden to show that his or her signing of the grantor's name was a mechanical act in that the grantor intended to sign the document using the instrumentality of the amanuensis." 

The rationale for such a law is evident. A person who stands to benefit from signing a document on somebody's behalf will naturally do so under just about any circumstance. Thus to eliminate fraud, the signatory needs to show that they signed the document at the person's dictation, instead of signing the document out of self-interest.

The California Supreme Court concluded the opinion by agreeing with the trial court's determination. "Given that Shirley was an interested party to the deed, it is presumed that her signing of Austin's name was invalid. However, this presumption has been successfully rebutted in this case. The trial court found, based on overwhelming evidence, that Shirley acted as a mere amanuensis, signing the deed at Austin's direct request, albeit not in his immediate presence. Because her signature was a mere mechanical act, and not an exercise of judgment or discretion, Austin's oral instruction to Shirley was sufficient. 'It is perfectly natural for a parent to be more bountiful to one of his children who has assumed the greatest burden of care and lavished the highest degree of solicitude upon him.' Camperi v. Chiechi, supra, '134 Cal.App.2d at p. 505."