Dunne v. Dunne

Filed 6/18/08 Dunne v. Dunne CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

Appeal from a judgment of the Superior Court of Orange County, Geoffrey T. Glass, Judge. Affirmed.

Grant & Morasse and Steven R. Morasse for Plaintiff, Cross-defendant and Appellant.

Law Office of Kari M. Myron and Kari M. Myron for Defendant, Cross-complainant and Respondent.

* * *

James M. Dunne (plaintiff) sued his daughter, Kelly Dunne (defendant), for breach of fiduciary duty, conversion, failure to provide an accounting, elder abuse, and money had and received. Defendant cross-complained against plaintiff and others. Her claims against plaintiff included breach of an oral contract, conversion, and money or services had and received. By stipulation, defendants claims against the other cross-defendants were stayed pending resolution of the action between plaintiff and defendant.

A jury found against plaintiff on his causes of action for conversion, elder abuse, and money had and received, and against defendant on the cross-complaints claims for conversion and money or services had and received. The jury returned advisory findings in plaintiffs favor for breach of fiduciary duty and for an accounting, plus found in defendants favor on her cause of action for breach of contract. But the jury declined to award damages to either party. The trial court then independently determined defendant breached her fiduciary duty to provide an adequate accounting to plaintiff and ordered her to do so. However, the court also concluded no damages [were] due from [defendant] to [plaintiff] on the breach of fiduciary duty claim.

Plaintiff appeals, arguing the oral agreement underlying the cross-complaints contract count is invalid as a matter of law. He also contends the evidence fails to support the no-damages finding on the complaints breach of fiduciary duty count. We affirm the judgment.

FACTS

Found in lying in a park one morning in late April 2000, plaintiff was taken to a hospital. He remained hospitalized until September 2001. Due to an injury to his cervical vertebrae, plaintiff has been rendered a quadriplegic.

On the day of plaintiffs admission to the hospital, defendant went to see him. After speaking with her father, nurses, doctors, and the police about what happened to him, defendant testified that she suspected something [wa]s wrong aside from what it was that [plaintiff] was doing th[e] night before he entered the hospital. According to defendant, within the first few days, she expressed her feelings to plaintiff. She testified he responded by saying, whatever you get out of this, go for it, Kelly, well split it 50/50. Plaintiff testified to a different version of their agreement, claiming if there was anything left . . ., I . . . agreed to split half with her upon my death.

On May 3, 2000, plaintiff signed a durable power of attorney, designating defendant as his attorney in fact. The instruments introductory paragraphs advised the principal, This is an important legal document, and [b]efore executing [it], you should know it may provide the person you designate as your agent (attorney in fact) with broad powers to manage, dispose, sell and convey your real and personal property and to borrow money using your property as security for the loan, plus, unless otherwise noted, The powers given . . . will exist for an indefinite period of time . . . . (Some capitalization and bold omitted.) The instrument granted defendant all of the powers listed, which included transactions concerning plaintiffs real and personal property, securities, financial institutions, insurance, estate and trust matters, personal and family maintenance, government benefit programs, plus claims and litigation.

At trial, plaintiff admitted defendant handled his personal and financial matters. Her efforts included paying plaintiffs bills, closing his personal bank account, handling insurance matters, applying for disability payments, retrieving his mail, providing him with food and pocket money, washing his clothes, and issuing checks to pay for plaintiffs board and care at the various facilities where he lived after his hospitalization ended. Defendant testified that, as a result of her efforts to help her father, she lost a job.

With plaintiffs consent, defendant opened a joint account at the credit union where she kept her own personal account. Plaintiffs disability, social security, and pension payments were deposited into the joint account. At trial, plaintiff presented evidence that of the approximately $138,000 in withdrawals from the account over a three-year period, defendant used over $98,000 for personal expenses. But during cross-examination, plaintiff admitted many of the withdrawals were either for his benefit or for expenditures of which he approved. Defendant also testified plaintiff told her make sure that youre taking care of yourself, Kelly.

Shortly after signing the power of attorney, plaintiff executed a grant deed transferring his home to defendant. He testified the transfer was for the purpose of selling it, paying some outstanding debts, and providing for his future care. Defendant made the mortgage payments and paid for repairs to the residence. She sold it in August 2000, netting slightly over $41,000, and deposited the money into her personal bank account. Defendant testified plaintiff gifted the home to her, but admitted the sale proceeds morally [belonged to her] father[], and claimed she used the money for [w]hatever my father asked me to do . . . . Plaintiff admitted that, at his request, defendant used some of the money to pay his debts.

In December 2000, defendant retained an attorney to represent plaintiff in a medical malpractice action. Both plaintiff and the attorney that represented him in that lawsuit, testified defendant assisted in the prosecution of the case, serving as plaintiffs guardian ad litem, gathering medical records and police reports, and taking photographs. The lawsuit was resolved by settlement in August 2002, with plaintiff receiving a net sum of slightly more than $1 million.

In late 2002, after the malpractice settlement, plaintiff asked defendant to find a house to purchase where they could live and he could receive care and therapy. Defendant found a home in Huntington Beach. Plaintiff agreed to purchase it, authorizing defendant to withdraw $125,000 from his malpractice settlement as a down payment. Defendant took title to the home in her own name. She hired an architect and contractors to remodel the home so that it would be accessible for a wheelchair-bound person. At trial, defendant testified that, because of architectural mistakes and weather, the remodeling project was not completed until November 2003 and cost over $150,000.

Defendant deposited the balance of the medical malpractice settlement funds into joint tenancy accounts with a financial services company and a real estate investment trust. The income generated by these investments was either deposited into a joint checking account or sent to defendants address. Plaintiff claimed defendant withdrew over $240,000 from the investment accounts. Defendant testified the withdrawals, which included the $150,000 to remodel the Huntington Beach home, were on her fathers behalf.

In late 2003, the parties relationship soured. Plaintiff terminated defendants power of attorney, plus requested and obtained her removal as an account holder on the parties various accounts, and refused to move into the Huntington Beach residence. This lawsuit subsequently ensued.

DISCUSSION

1. Validity of the Parties Oral Contract

Plaintiff argues the parties oral agreement to split the proceeds obtained from the medical malpractice action is invalid for two separate reasons. First, he claims the agreement violates Californias prohibition against assigning a cause of action for personal injuries. Second, he contends the agreement violated defendants duties under the Power of Attorney Law. (Prob. Code,  4000 et seq.) These contentions lack merit.

a. Nonassignability

As to plaintiffs nonassignability contention, while it is true a right of action for personal injuries cannot be transferred or assigned (see Reichert v. General Ins. Co. (1968) 68 Cal.2d 822, 834), that is not what occurred in this case. Defendant claimed plaintiff agreed to equally share the proceeds of the medical malpractice action.

A distinction exists between a nonassignable cause of action arising from a personal wrong, and the assignment of the proceeds from any recovery in a lawsuit over that injury. A contract of the latter type is valid. (Lee v. State Farm Mut. Auto. Ins. Co. (1976) 57 Cal.App.3d 458, 465-466 [insurance policy provisions requiring insured to reimburse insurer for medical payments from recovery against third parties valid: It has been clearly established in California that . . . contract provisions . . . providing only access to the proceeds of settlement or judgment resulting from the exercise of rights of recovery by the injured person, are valid and enforceable]; Block v. Cal. Physicians Service (1966) 244 Cal.App.2d 266, 273 [same; assignment is valid as operating only upon monies, if and when, recovered from the third party]; Cassetta v. Del Frate (1931) 116 Cal.App. 255, 257 [attorneys contingency fee agreement; assignment is . . . an interest in the proceeds collected].) Even Franklin v. Franklin (1945) 67 Cal.App.2d 717, the authority cited by plaintiff in support of his argument, recognized a distinction exists between the mere cause of action, as a property right, and a judgment for money or the money itself when recovered on the claim. (Id. at p. 722.)

The prior lawsuit was admittedly prosecuted in plaintiffs name. Defendants participation in the lawsuit was limited to appearing as his guardian ad litem and gathering evidence to support the action. Thus, plaintiffs agreement to share the proceeds of his medical malpractice case with defendant did not violate the prohibition against assignment of a claim for personal injuries.

b. The Power of Attorney

Alternatively, plaintiff attacks the validity of the parties oral agreement citing the limitations imposed on attorneys in fact by the Power of Attorney Law. In support of this argument, plaintiff initially contends the parties signed the power of attorney before they entered into the oral agreement to share his medical malpractice recovery. As a result, the Power of Attorney Law rendered the oral contract invalid because it was not in writing and many of the actions defendant testified she allegedly performed, i.e., making gifts, depositing plaintiffs funds into joint tenancy accounts, and borrowing funds from him, were not expressly authorized by the power of attorney.

In response, defendant asserts the first issue is when parties created the oral contract. This presents a question of fact. (In re First Capital Life Ins. Co. (1995) 34 Cal.App.4th 1283, 1287; Southern Christian Leadership Conference v. Al Malaikah Auditorium Co. (1991) 230 Cal.App.3d 207, 220; La Cava v. Pickford (1950) 100 Cal.App.2d 658, 671.) On appeal, we apply the substantial evidence rule to resolve factual disputes. (Saks v. Charity Mission Baptist Church (2001) 90 Cal.App.4th 1116, 1132.) Under it, the power of an appellate court begins and ends with the determination as to whether, onthe entire record, there is substantial evidence, contradicted or uncontradicted, which will support the determination, and when two or more inferences can reasonably be deduced from the facts, a reviewing court is without power to substitute its deductions for those of the trial court. If such substantial evidence be found, it is of no consequence that the trial court believing other evidence, or drawing other reasonable inferences, might have reached a contrary conclusion. [Citations.] (Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873-874.)

Although it declined to award damages to defendant, the jury found in her favor on the breach of contract cause of action. She testified this agreement was reached within the first few days of plaintiffs hospitalization. Thus, it appears that oral contract preceded plaintiffs execution of the power of attorney.

Plaintiff further contends that, even assuming the oral contract preceded the power of attorney, it is still invalid because her 50% interest in [plaintiffs] personal injury claim . . . created a conflict of interest with her appointment as [plaintiffs] attorney-in-fact. But, under the Power of Attorney Law, defendants agreement to act as plaintiffs attorney in fact did not render the parties prior oral agreement invalid per se.

Plaintiff relies on Probate Code section 4232 to support of his argument. Subdivision (a) of that statute declares, An attorney-in-fact has a duty to act solely in the interest of the principal and to avoid conflicts of interest. But what plaintiff fails to note is that subdivision (b) of the statute limits the scope of subdivision (a) by declaring, An attorney-in-fact is not in violation of the duty provided in subdivision (a) solely because the attorney-in-fact also benefits from acting for the principal, has conflicting interests in relation to the property, care, or affairs of the principal, or acts in an inconsistent manner regarding the respective interests of the principal and the attorney-in-fact. (Prob. Code,  4232, subd. (b).) Thus, the mere existence of an oral agreement to equally split the proceeds of the medical malpractice lawsuit would not constitute a violation of section 4232, subdivision (a).

The issue of the oral contracts enforceability was presented to the jury. Since it found for defendant on the breach of contract cause of action, it follows that the jury rejected plaintiffs unenforceability defense. (Bowers v. Bernards, supra, 150 Cal.App.3d at pp. 873-874.)

Plaintiff cites expert testimony from an attorney concerning the existence of the conflict of interest as a breach of defendants fiduciary obligations to plaintiff. But this argument ignores the parties nonchalant use of the power of attorney. Although the instrument expressly declared it does not authorize any[]one to make medical and other healthcare decisions for [the principal] (capitalization and bold omitted), both plaintiff and defendant testified they intended it only to authorize defendant to pull the plug in the event plaintiff was placed on life support. It appears the parties treated the instrument merely as a convenient mechanism to allow defendant to handle plaintiffs affairs. Plaintiff also ignores the fact that, although the jury returned an advisory finding for him on the breach of fiduciary duty claim, it rejected his causes of action for conversion, elder abuse, and money had and received, plus declined to award him any damages.

Thus, plaintiff has failed to establish the oral contract was invalid as a matter of law.

2. Denial of Recovery on Plaintiffs Breach of Fiduciary Duty Claim

Citing several provisions of the Power of Attorney Law he alleges defendant breached, plaintiff argues there is no substantial evidence supporting the [trial] Courts decision to not award damages on his breach fiduciary cause of action.

First, we note plaintiff has failed to present an appellate record establishing he preserved his right to challenge the no-damages award by moving for a new trial on the ground of inadequate damages. Failure to move for a new trial on the ground of excessive or inadequate damages precludes a challenge on appeal to the amount of damages if the challenge turns on the credibility of witnesses, conflicting evidence, or other factual questions. [Citations.] A trial court ruling on a new trial motion on the ground of excessive or inadequate damages must weigh the evidence and acts as an independent trier of fact. [Citations.] Thus, the trial court is in a far better position than the Court of Appeal to evaluate the amount of damages awarded in light of the evidence presented at trial. [Citations.] [] When defendants first challenge the damage award on appeal, without a motion for new trial, they unnecessarily burden the appellate courts with issues which can and should be resolved at the trial level. [Fn. omitted.] [Citation.]

The same is true when a plaintiff challenges a damage award on appeal on the ground of inadequacy. (County of Los Angeles v. Southern California Edison Co. (2003) 112 Cal.App.4th 1108, 1121.)

But even on the merits, plaintiffs argument is unpersuasive. The amount of damages presents a question of fact. (Seffert v. Los Angeles Transit Lines (1961) 56 Cal.2d 498, 506.) As with other factual issues, the appellate court must determine every conflict in the evidence in respondents favor, and must give him [or her] the benefit of every inference reasonably to be drawn from the record [citation]. (Id. at p. 508.) An appellate court is authorized to disturb a judgment on the ground of inadequacy of damages only where the amount of the award is supported by no substantial evidence in the record and the verdict is a clear abuse of . . . discretion. (Sherwood v. Rossini (1968) 264 Cal.App.2d 926, 931.)

This case involved plaintiffs action to recover damages from defendant for allegedly misappropriating his property and money, and her cross-action to recover damages for his alleged breach of their oral agreement. The jury returned an advisory finding in plaintiffs favor on his fiduciary breach cause of action, and returned a verdict for defendant on her breach of contract cause of action, but declined to award damages to either party. In a separate court trial on the breach of fiduciary duty and accounting causes of action based on the evidence presented before the jury, the court ruled for plaintiff, but found defendant only breached her fiduciary obligation to account for the money she spent. It thus ordered her to prepare an accounting but denied any compensatory recovery.

Both at trial and on appeal, plaintiff argued he was entitled to recover slightly over $506,000 from defendant based on the alleged misappropriation of the home sale proceeds ($41,075.13), unauthorized withdrawals from the joint bank account ($98,400), use of the settlement proceeds to purchase the Huntington Beach home in her name ($125,000), and unauthorized withdrawals from the investment accounts that had been funded with the balance of the medical malpractice settlement funds ($242,370). Defendants breach of contract claim was based on plaintiffs alleged promise to equally split the proceeds of the medical malpractice lawsuit. That case resulted in a settlement that netted plaintiff slightly over $1 million. In light of the jurys advisory findings and verdict, the court likely concluded the amount each party was entitled to recover from the other cancelled out a net recovery to either one. Given the record before us, we cannot conclude the lower court abused its discretion in declining to award plaintiff any compensatory recovery on his breach of fiduciary duty claim.

3. Defendants Request for Appellate Sanctions

In her brief, defendant requests we award her attorney fees for this appeal, claiming plaintiffs appeal is frivolous. The sanctions request is procedurally improper. California Rules of Court, rule 8.276(b) requires a request for appellate sanctions be made by a separate motion . . . served and filed . . . no later than 10 days after the appellants reply brief is due. Although it is unlikely defendant is otherwise be entitled to sanctions on appeal, her failure to comply with the procedural requirements supports a denial of the sanctions request. (Kajima Engineering and Construction, Inc. v. Pacific Bell (2002) 103 Cal.App.4th 1397, 1402.)

DISPOSITION

The judgment is affirmed. Respondent shall recover her costs on appeal.

RYLAARSDAM, ACTING P. J.

WE CONCUR:

ARONSON, J.

FYBEL, J.

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