Breach of Fiduciary Duty

Every so often an appellate opinion, whether published or unpublished, will have portions that are worth mentioning in terms of less-than-stellar behavior. 

Here are some excerpts:

"Two weeks before their meeting, Lovett learned through his own research that Ruby was entitled to a share of the real property owned by her grandmother's trust. The record is silent as to whether he informed Ruby about his discovery. Instead, Lovett prepared an "Agreement" which purported to give him as a fee 85 percent of the value of any real property "left behind" in Yvonne's name which he recovered for Ruby." 

An 85% finder's fee was unconscionably high as determined by the probate court. 

I am baffled that the agent would think that this was proper. Their rationale, presumably, was that this sort of "arrangement" had worked in the past without retribution.

"(b) If any interest in real property is found, and that real property is found to have any equity value, I agree for services rendered on my behalf that I ask for the first 15% of any value, if any value is found, come to me Ruby R. Revell as beneficiary, and I relinquish any right to any percentage of value up to and above 15% in any real property found to have any equitable value for services rendered on my behalf."

A very crafty way of drafting such an arrangement to put it charitably. 

Large numbers capture one's attention when reading. So instead of using a large number to reflect his fee, 85%, the agent used a small number, 15%, to reflect her fee. This drafting style can hardly be seen as laudable. The proper way to draft an agreement is to make the terms clear and understandable, not opaque and misleading.

"On December 29, 2011, Lovett drafted another letter to Gary Ryan on BLG's letterhead. He forged Burlison's name on the letter and copied himself on the letter to make it look like the letter was really been written by Burlison."

Succinctly stated, forgery is never good. 

"He falsely told Ryan that Ruby was not entitled to information and that she had to wait for her money from the State, when all along he had it in his possession not subject to any court or state order."

When a litigant acts in such a cavalier fashion, a bad result is almost a certainty. This case was no different.

Revell v. Burlison Law Group, APC et al., Los Angeles County Superior Court, case #
BP140980. The above quoted language is from the unpublished appellate opinion regarding this case.

Undue Influence

In the U.S., a person is generally free to write their trust in a manner they see fit. For example, this person could leave everything to their child or nothing to their child (disinheritance). California does not have a forced heirship scheme whereby a next of kin must be included in the distribution of the estate. Countries that practice civil law, e.g. Germany and Italy, have forced heirship law. Conversely, the U.S. is a common law jurisdiction.

However, the validity of a trust or will can be challenged if the product of "undue influence." For example, a disgruntled father disinherits his son and leaves his entire estate to a "dear friend" significantly younger than him. "California courts have long held that a testamentary document may be set aside if procured by undue influence." David v. Hermann (2005) 129 Cal.App.4th 672, 684. 

Undue influence was the focus of a recent unpublished appellate opinion. One intriguing aspect of the case was that the respondent had apparently engaged in similar behavior with another individual.

 "The court also found that how Uriostegui came to inherit the Prescott family's assets was, as one witness put it, "eerily similar" to how she inherited the Olive Street property from Downen. In particular, Downen wrote letters about her son that were similar to the letters Prescott wrote Gregory. The letters in both cases were written by ailing senior citizens who would soon leave their estates to Uriostegui, asserted the authors were "of sound mind" (as if "to provide support for the gifting of entire estates to a non-family member"), used similar adjectives to described the respective sons ("disrespectful, lying, drug dealing, attributing bad-mouthing to connected family, wishing them both dead, and thieving"), and included "the theme of engendering mistrust to those that would be a natural heir." The court found: "The similarities in language and the resulting isolation [of immediate family members] are all evidence of a common scheme/plan and they also solidify [Uriostegui's] identity as someone capable of exerting the undue influence that she exerted in Prescott's last years."

Another noteworthy characteristic of the case was the methodology of one expert witness. 

"The court also relied on the testimony of Dr. Susan Bernatz, a forensic neuropsychologist, who provided expert testimony on Prescott's testamentary capacity and the indicators of undue influence. Dr. Bernatz analyzed undue influence using a model she developed and referred to by the acronym SCAM (susceptibility, confidential relationship, actions and tactics, and monetary loss)."

Whenever a litigant has the term "scam" associated with them, in whatever fashion, it highly likely will not portray them in a positive light. 

Los Angeles County Superior Court case # 16STPB03890

Witness Credibility

A contested court proceeding typically involves the testimony of witnesses to the event or events in question. One side will naturally have their witnesses which they will use to bolster their argument. Conversely the other side will have their witnesses too. Each side can cross-examine the other's witnesses to undercut their credibility. Ultimately a decision has to be made as to a witness' credibility, i.e. is the witness' testimony a reliable source of information or not. The person entrusted with the responsibility to determine witness credibility is the trial judge. People v. Jackson (2014) 58 Cal.4th 724, 749. 

A recent unpublished appellate decision involved a trial judge making a determination as to witness credibility.

The decedent had allegedly executed a trust and quitclaim deed. The trust named decedent's girlfriend as the remainder beneficiary. Decedent's daughter challenged the validity of the trust and quitclaim deed.

If the trust and quitclaim deed were deemed valid, then decedent's girlfriend would be a beneficiary of decedent's estate. On the other hand, if the documents were deemed invalid, decedent died intestate and his estate would be distributed to his heirs. Decedent's daughter would be an heir. Decedent's girlfriend would not be an heir. Thus, who inherited from decedent's estate turned on whether or not decedent's purported trust was valid or not.

A primary point of contention was whether or not decedent signed the trust and quitclaim deed. Decedent's girlfriend claimed that decedent had signed the trust and quitclaim deed. A forensic document examiner testified that decedent had not signed the trust and quitclaim deed. While the documents reflected a signature, it was not decedent's signature. The trial judge then made the determination that decedent's girlfriend was not a credible witness while the forensic document examiner was a credible witness.

A footnote from the unpublished appellate opinion provides some context for this determination:

The court noted, "namely, [Jozelle] testified at her deposition that she did not know about the [p]urported [t]rust until after [d]ecedent's death, but at the unlawful detainer hearing she testified that [d]ecedent showed her the [p]urported [t]rust; and although [Jozelle] testified during her deposition that she never had any documents pertaining to the title of the [property], she testified during the trial that she helped [d]ecedent prepare the [q]uitclaim [d]eed and wrote portions of it."

Superior Court of San Diego County, Super. Ct. No. 37-2015-00005361-PR-LA-CTL

Holographic Will

A holographic (i.e. hand-written) will is permitted in California provided the material provisions are in the testator's hand-writing (the person writing the will) and is signed by the testator. Probate Code §6111(a).

A recent unpublished appellate opinion focused on the signature's location in the holographic will.

The holographic will in question read:

"I Harry Edward Mitchell of [¶] Being Sound Man, Quit Claim my wife [¶] Debra Mitchell the house at [¶] 21600 Calle Degado Yorba Linda [¶] And all contents and cars [¶] At the residents."

The objectors of the will argued that the will was invalid primarily because it lacked a signature. The appellate court disagreed and held that the lack of a signature was not fatal to the will's validity. A prior case, Estate of Williams (2007) 155 Cal.App.4th 197, held that writing one's name at the top of the document satisfied the signature requirement if the document was otherwise complete. Similarly here, the testator had written his name at the top of the document and it was otherwise complete. While the will's verbiage was not grammatically sound, i.e. "at the residents," the tesator's intent was clear. The testator wanted to leave the majority (if not all) of his estate to his spouse.

Estate of Mitchell, Orange County Superior Court, Case No. 30-2017-00896904.   

If hypothetically the holographic will was invalid, Mr. Mitchell would have died intestate (without a will). Consequently, his community property would have been distributed to his surviving spouse, the petitioner in this matter. Probate Code §6401. Mr. Mitchell's separate property would have been distributed to his surviving spouse and his children, the objectors in this matter. Probate Code §6402.  

I should mention that this case had two variables which portend litigation, a step-parent/step-child relationship and a holographic will. In the case of the latter component, a holographic will does not require attestation. Thus, it is entirely possible that the testator can write their will privately whereby it is a complete mystery to everybody on earth. Naturally relatives and friends might hear about such a will, but there is no person who can definitively say that they saw the testator sign their will in their presence and they signed such document as a witness.

Power of Appointment

Probate Code §610(f) defines a power of appointment as a "power that enables a powerholder acting in a nonfiduciary capacity to designate a recipient of an ownership interest in or another power of appointment over the appointive property."

A recent published appellate opinion addressed whether a surviving spouse could properly exercise a power of appointment for their own benefit involving the deceased spouse's property. 

Tubbs v. Berkowitz, (2018) ___ Cal. App. 5th __.

"In 2005, Berkowitz and his wife created the Trust of which they were trustees during their lifetimes. The Trust provided that, after the death of the first spouse, the trustee (the surviving spouse) was required to allocate the Trust's assets between the surviving spouse's trust and the Marital Trust." 

"The Marital Trust also provided the surviving spouse with a general power of appointment, which is the focus of this appeal. The relevant provision stated: "At any time during the surviving spouse's life, the trustee shall distribute all or any part of the trust, including accrued income and undistributed income, to such one or more persons and entities, including the surviving spouse or the surviving spouse's estate, and on such terms and conditions, outright, in trust, or by creating further powers of appointment, as the surviving spouse shall request by an acknowledged document that specifically refers to this power of appointment." The surviving spouse's trust included an identical provision." 

"In 2011, Berkowitz's wife passed away, requiring Berkowitz to allocate the Trust's assets as described above. In April 2017, Berkowitz filed a petition to confirm his proposed allocation of assets, among other things. After Tubbs filed objections to Berkowitz's petition, Berkowitz exercised his general power of appointment and appointed all assets in the Trust to himself, effectively divesting the contingent beneficiaries (which included Tubbs) of their right to distributions upon Berkowitz's death."

Ultimately, the trial court found that the exercise of the power of appointment was proper, since the trust expressly provided the surviving spouse with the ability to do so and the appellate court agreed.   

When is a "Spouse" really a Spouse?

California law is very clear as to when 2 people enter into a valid marriage. 

Family Code § 350(a) states "Before entering a marriage, or declaring a marriage pursuant to Section 425, the parties shall first obtain a marriage license from a county clerk."

I was recently reading an unpublished appellate opinion that dealt with this issue. The facts are rather uncomplicated:

"On a Saturday in October 1996, Chandre' D. Shelton (Shelton) and Kennedy Mitchell (Mitchell) exchanged vows before friends and family at a ceremony held at the First Baptist Church of Beverly Hills in West Hollywood, California. Shelton and Mitchell had not gone to the Los Angeles County Clerk's Office to obtain a marriage license. They had not paid the chapel for any services relating to a marriage license. And the county has no record — public or confidential — that they ever obtained a marriage license.

In 2003, Shelton filed paperwork to adopt a child who was in the midst of juvenile dependency proceedings, and she was informed by the Department of Children and Family Services that there was no record of any marriage license. When Shelton asked the pastor who had officiated the 1996 ceremony about this, he replied simply that "God was the witness." Shelton took no further action at that time to obtain a marriage license, and adopted the child on her own.

In 2008, Shelton sued Mitchell for child support regarding the child she and she alone had adopted. Her claim was rejected, and she was again informed that there was no record of any marriage license. Again, Shelton took no further action regarding the marriage's legal validity.
On January 9, 2017, Mitchell died without a will."

If Ms. Shelton was Mr. Mitchell's spouse, she would have various rights regarding Mr. Mitchell's estate by virtue of being the surviving spouse. For example, she would have a claim to all of Mr. Mitchell's share of the community property and at the very least a portion of his separate property. Furthermore, Ms. Shelton would have the highest priority for being appointed the estate's administrator.

One curious argument offered by Ms. Shelton was "the possibility that the license got lost in the mail." The appellate court was unpersuaded. "Shelton's argument about losing the license in the mail misapprehends the process for creating a legally valid marriage because whether a license is lost in the mail after the ceremony has no bearing on whether a license was obtained in the first place."    

Ultimately, the Court of Appeal affirmed the trial court's decision that Ms. Shelton was not Mr. Mitchell's spouse because no marriage license was issued by Los Angeles County.

Of note, Ms. Shelton did not raise the issue of a putative spouse in the trial court so she could not raise that issue on appeal. 

In the Matter of Chandre' D. Shelton And Kennedy M. Mitchell, Los Angeles County Superior Court, case # 17STPB00425.