Conservatorship of Katz

Filed 10/24/06 Conservatorship of Katz CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

APPEAL from a order of the Superior Court of San Diego County, Richard G. Cline, Judge. Reversed.

Lenoxx Electronics Corporation and its principals, Morris Fuchs and Bernard Fuchs (collectively, "Lenoxx") appeal from an order appointing a conservator of the estate of Earl Katz. Lenoxx contends good cause did not exist for the appointment under Probate Code^[1] section 1802 because (1) a guardian ad litem could have been appointed to manage Katz's estate as an alternative to a conservator, and (2) Katz demonstrated bad faith in his petition. We reverse.

FACTUAL AND PROCEDURAL SUMMARY

On March 30, 2004, Katz filed an ex parte petition for a limited conservatorship and sought appointment of Chris Canaday as temporary conservator of his estate. The petition for appointment of the conservator explained, "Petitioner has been diagnosed with bi-polar disorder. Petitioner is currently a plaintiff in a civil action. Petitioner requests the appointment of the proposed conservator for the purposes of litigating the above mentioned civil action as he cannot make decisions relating to the action on his own due to the disorder." Katz explained there was immediate need for appointment of the conservator because, "current civil litigation has statute which needs addressed. Judge in civil litigation needs conservatorship appointed because of Mr. Katz's mental instability."

The section of the ex parte application addressing "alternatives to a conservatorship," implements the requirement of Probate Code section 1821, subd. (a)(3) that the petitioner provide a brief statement of facts regarding the "alternatives to conservatorship considered by the petitioner and reasons why those alternatives are not available." In response to that requirement, Katz did not specify any alternative to a conservatorship, and represented that a conservatorship was requested because: "need it for current litigation."

The court referred the petition to a court investigator, who recommended a conservator for Katz's estate -- but not a limited conservatorship -- because Katz had no known developmental disability. On March 30, 2004, the court granted the petition and letters of temporary conservatorship of estate were issued for one month.

On May 12, 2004, Katz filed a petition for a temporary conservator of estate, and the court extended the grant of temporary conservatorship until June 11, 2004. Katz addressed the requirement that he consider alternatives to conservatorship with this statement, "power of [attorney] will not suffice." The court's minute order explained, "A conservatorship of the estate is necessary to pursue litigation against Wal-Mart. (New York judge ordered a conservatorship be established.) There are no assets [in Katz's estate] at this time." At a June 11, 2004 hearing, the court extended the temporary conservatorship until July 30, 2004. At a hearing scheduled for July 30, 2004, there was no appearance of counsel, and a hearing date was set for September 17, 2004, and temporary letters were extended to an unspecified date. On September 17, 2004, the letters were extended until September 24, 2004, and the matter continued until October 29, 2004. Katz filed an amended petition for conservator of the estate on September, 24, 2004, and stated a conservatorship was needed "to pursue litigation against Wal-Mart. (New York Judge ordered a California Conservatorship be established.) There are no assets at this time."

On October 19, 2004, Lenoxx's attorney, Leslie Lupert, submitted a declaration supporting Lenoxx's appearance in the proceedings as an interested party opposed to Katz's petition. The declaration stated Katz and his company, Time & Again Creations, Inc., had an agreement to assist Lenoxx, a supplier of small electronic products, in marketing these products to Wal-Mart. In the late 1990's, Lenoxx sued Katz in New York for disputes arising out of their agreement. In 2004, after years of litigation involving different causes of action, a default judgment was entered against Katz for $6,520,950.41, which has not been paid.^[2]

Lupert also objected that Katz's attorney misrepresented that the judge who presided over the New York case had ordered the establishment of a conservatorship in California. Lupert declared that Katz was represented by counsel in New York, and if that court at any time deemed Katz incompetent, it could have appointed a guardian ad litem for him under rule 17(c) of the Federal Rules of Civil Procedure (28 U.S.C.), which states, "The court shall appoint a guardian ad litem for an infant or incompetent person not otherwise represented in an action or shall make such other order as it deems proper for the protection of the infant or incompetent person."

On October 29, 2004, at a contested hearing regarding the petition, Katz's counsel admitted he "may have" made the misrepresentation. He also rejected the alternative to conservatorship and stated, "The problem with the guardian ad litem as opposed to a conservatorship is it doesn't necessarily allow them to act on Mr. Katz's behalf as much as a conservatorship would." The court ruled: "I do not feel that there is sufficient medical or psychiatric information that shows the inability of [Katz] to participate in the proceedings, particularly when we consider the possibility of alternatives.

"I do not have sufficient information from anyone having firsthand knowledge of the litigation in New York to protect your client's interest in that litigation. Absent that information, I only have what seems to be an appearance that Mr. Katz might be misusing the legal process to delay and stall enforcement of a judgment. Without additional information, this petition is denied without prejudice." (Emphasis added.)

On January 20, 2005, Katz filed a petition for conservator of the estate, and included medical and psychiatric evaluations. A treating psychiatrist informed the court by letter, "I have treated Mr. Katz since August 24, 1998. He carries the DSM IV psychiatric diagnosis of Bipolar Affective Disorder. His condition has been severe and intermittently disabling. Mr. Katz has a history of experiencing profound mood lability and episodes of psychotic decompensation. His psychiatric disorder often results in impaired insight and subsequent poor judgment." Katz at no time provided the additional information that the court had sought at the hearing regarding a guardian ad litem as an alternative to a conservatorship. Lenoxx again objected to the petition on the same grounds as before. The court overruled the objections and granted the petition. Letters of conservatorship were issued on July 15, 2005.^[3]

DISCUSSION

I.

As a threshold matter, we dispose of Katz's contention Lenoxx had no standing to oppose his petition. "[A]ny interested person" may appear at the hearing to oppose the petition for conservatorship. (§ 1829, subd. (d).) A separate section of the Probate Code states "[t]he meaning of 'interested person' may vary from time to time and shall be determined according to the particular purposes of, and matter involved in, any proceeding." (§ 48, subd. (b).) Katz's petition was based solely on his desire to protect his interest in the New York litigation. Given that Lenoxx obtained a multi-million dollar default judgment against Katz, it had sufficient interest in the conservatorship proceedings and the trial court did not err in allowing it to intervene as an interested party.

II.

We review the entire record in the light most favorable to the trial court's findings and resolve any conflicts in the evidence and draw all reasonable inferences in favor of the findings. Substantial evidence is evidence of ponderable legal significance. (Conservatorship of Ramirez (2001) 90 Cal.App.4th 390, 401.) Under this standard, the court's finding is erroneous because Katz did not present evidence of good cause for the grant of a conservatorship.

Section 1802 states, "Subject to section 1800.3, a conservator of the person or estate, or both, may be appointed for a person who voluntarily requests the appointment and who, to the satisfaction of the court, establishes good cause for the appointment." As explained in detail above, Katz failed to comply with the statutory requirement that he present "[a]lternatives to conservatorship considered by the petitioner and reasons why those alternatives are not available." (§ 1821, subd. (a)(3).) During the hearing, the court rejected Katz's deficient explanation regarding the specific alternative of a guardian ad litem and denied the petition, in part, on that basis. Katz's petition did not cure that deficiency; accordingly, the court 's ruling was not supported by substantial evidence.

On appeal, Katz concedes, "We agree with [Lenoxx] that there is no question that [r]ule 17 of the Federal Rules of Civil Procedure [(28 U.S.C.)]permits an application for the appointment of a guardian." But he argues, "The sole purpose of a conservatorship is to provide a competent person to act as an agent for the conservatee. A guardian ad litem is an officer of the court with full responsibility to assist court to secure a just, speedy and inexpensive determination of action." This argument is conclusory and unpersuasive, and does not refute the concession that a guardian ad litem was an available alternative. Katz failed to address the court's concern regarding the absence of evidence regarding an alternative to a conservatorship.

Based on our conclusion Katz did not establish good cause for his petition, we do not address Lenoxx's contention that Katz's petition was filed in bad faith.

DISPOSITION

The judgment is reversed.

O'ROURKE, J.

WE CONCUR:

NARES, Acting P. J.

HALLER, J.

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^[1] All statutory references are to the Probate Code unless otherwise stated.

^[2] We previously denied Lenoxx's motion to take judicial notice of the docket entries relating to the New York litigation because they are not relevant to the disposition of this appeal.

^[3] We grant Lenoxx's January 8, 2005, motion to augment the record to include the letters of conservatorship. Lenoxx points out that Katz's reply brief fails to comply with the requirement that it "support any reference to a matter in the record by a citation to the record." (Cal. Rules of Court, rule 14(a)(1)(C).) Accordingly, we grant Lenoxx's motion to strike portions of Katz's brief that are not supported by citation to the record. We refer in particular to assertions regarding Katz's manner of earning his livelihood. "The appellate court . . . is confined in its review to the proceedings which took place in the court below and are brought up for review in a properly prepared record on appeal. [Citation.] Statements of alleged fact in the briefs on appeal which are not contained in the record and were never called to the attention of the trial court will be disregarded by this court on appeal." (Kendall v. Barker (1988) 197 Cal.App.3d 619, 625.)