Filed 11/5/18 Whatley v. Hunt CA5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

APPEAL from a judgment of the Superior Court of Mariposa County. H. N. Papadakis, Judge. (Retired Judge of the Fresno Sup. Ct. assigned by the Chief Justice pursuant to article VI, § 6 of the Cal. Const.)

Burton Law Firm, John S. Knowlton; Weintraub, Tobin, Chediak, Coleman, Grodin and Brendan J. Begley for Defendants and Appellants.

Law Offices of S. Ross Kochenderfer Jr., S. Ross Kochenderfer Jr. and William H. Kochenderfer for Plaintiffs and Respondents.

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Plaintiffs, an elderly woman and her granddaughter, the latter in her capacity as trustee of the grandmother’s trust, brought this action for an accounting of the trust during the period defendant acted as trustee, and for damages allegedly arising out of defendant’s mismanagement of the grandmother’s and the trust’s financial affairs. The trial court found defendant liable to plaintiffs on theories of undue influence and financial elder abuse, as well as breach of fiduciary duty, fraud, and negligence. Defendant appeals, challenging only the invalidation of a $1 million alleged gift to defendant and his wife. We conclude the trial court properly determined neither the statute of limitations nor laches barred the claim, and substantial evidence supports the finding of undue influence. Accordingly, we affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND

In late 2004, plaintiff Rosemary White (Rosemary) moved to Montana to live near her son, Martin. Rosemary’s husband and her only other child, Peggy, had passed away several years before. In May 2005, Martin and his wife, Penny, were killed in an airplane crash. Rosemary was estranged from and fearful of her grandsons, Martin’s sons, who had displayed violent tendencies; her granddaughters, Peggy’s daughters, lived in California. Alone in Montana, Rosemary, who was then 83 years old, was befriended by Martin’s friend, David Hunt (Hunt). Hunt assisted Rosemary with household chores, such as yard work and having her refrigerator and heating system fixed. He arranged a “celebration of life” honoring Martin and Penny. Hunt also assisted Rosemary, who was the heir to Martin’s estate and the executor of his will, in finding a probate attorney.

In September 2005, Rosemary returned to California. Just before she left Montana, Hunt drafted two documents and accompanied Rosemary to a notary, where she signed them and had them notarized. One was a durable power of attorney, which granted Hunt and his wife, Jodie, the power to sign on Rosemary’s behalf on all personal and financial matters. The second document was entitled “Personal and Financial Administrator,” (some capitalization omitted) and authorized the Hunts to administer Rosemary’s personal and financial affairs, manage all her assets, and approve and manage “all financial matters related to [her] present and future estate.” (Capitalization omitted.)

After Rosemary’s return to California, Hunt continued to assist her and her attorney, Steven Cummings, with probate and the sale of properties in Martin’s substantial estate. Hunt was privy to communications between Rosemary and Cummings. He telephoned Rosemary every morning. Rosemary handwrote a card and a letter to the Hunts, both dated November 10, 2006, and both expressing her gratitude for their advice, friendship, and help with Martin’s probate proceeding. In almost identical language, both documents stated that the time had come to finalize the disposition of the estate’s funds, and Rosemary insisted the Hunts accept a million dollars. The letter added that Rosemary would assume the tax obligation on the gift.

On December 7, 2006, Cummings wrote to Rosemary, with a copy to Hunt, stating that the decree finalizing the estate had been signed. The letter indicated the attorney had discussed estate planning with Rosemary, and advised that she could make gifts of $12,000 per year to anyone without paying gift tax. He noted his understanding that Rosemary intended to make such gifts to her three granddaughters, a granddaughter’s spouse, a granddaughter’s significant other, and two great grandchildren. He advised that gifts for 2006 had to be made by December 31, 2006, and gifts for 2007 could be made in January. Martin’s estate was worth approximately $2.2 million. In December 2006 and again in January 2007, Rosemary made gifts of $12,000 each to her three granddaughters, Leslee, Jennifer, and Emily, and to Leslee’s husband, Leslee’s two children, Jennifer’s significant other, and each of the Hunts.

Rosemary wrote a check to Hunt for $1 million, dated January 2, 2007. On the same date, Hunt attempted to deposit it into an account at his bank, Edward Jones, in Montana, where Rosemary also maintained accounts. The check was returned for insufficient funds. An Edward Jones representative contacted Rosemary about the insufficiency; Rosemary arranged for a transfer of funds from another account to cover the check. The funds were deposited directly into the Hunts’ account at Edward Jones, which had been opened a few days earlier. Neither Rosemary nor Hunt advised Rosemary’s attorneys or accountant of the alleged gift.

In the fall of 2007 and spring of 2008, Hunt assisted Rosemary and her California attorney, Ross Kochenderfer, in creating a trust for the benefit of Rosemary and her granddaughters. Rosemary designated Hunt as the trustee, with Jodie as successor trustee, and Leslee as Jodie’s successor. The LJE Investment Trust (LJE Trust) instrument was signed in February 2008, and Hunt set up a bank account for the trust at Edward Jones. The initial trust property included loans Hunt had made with Rosemary’s money to Hunt’s friend, Briar Purdy, for construction and operation of Purdy’s army-navy stores.[1] As trustee, Hunt subsequently made further loans to Purdy, as well as loans to another Hunt friend, Manning, to purchase and repair his home.

Hunt arranged for Leslee to be paid $2,000 per month, and for her sisters to be paid $1,000 each per month, from trust funds. From the payments received by the trust on the loans, Hunt deducted $1,000 per month, which he paid to himself as “trustee’s fees.” He also wrote checks to himself and Jodie for $2,000 per month as “gifts” from Rosemary. Later, during the Hunt’s marital dissolution proceeding, Hunt paid some of the Hunts’ personal expenses with funds from the LJE Trust, including Jodie’s credit card debt and the cost of new automobiles. Hunt maintained he borrowed these funds with Rosemary’s knowledge, because the court in the dissolution action prevented him from moving large sums of the Hunts’ money; there was no written authorization for these purported loans. Hunt never provided Rosemary with a written accounting of trust assets and activities.

Around 2011, Leslee began to notice Rosemary was becoming forgetful. In the fall of 2012, Rosemary amended the LJE Trust instrument to appoint Leslee trustee in place of Hunt. Kochenderfer and Rosemary’s accountant, Philip Booker, requested trust information from Hunt. In January 2013, they traveled to Montana to meet with Hunt and obtain documentation concerning the trust and its activities. When Hunt provided information to them, he did not mention the $1 million transfer or the funds he purportedly borrowed for his personal expenses. In 2013, Kochenderfer and Booker discovered the $1 million transfer to the Hunts; they also discovered that portions of the payments from Rosemary’s investments were being diverted from Rosemary’s accounts to Hunt.

In August 2013, Rosemary and Leslee, as trustee of the LJE Trust, filed this action against the Hunts to compel an accounting and for damages, alleging causes of action for breach of fiduciary duty, fraud, unjust enrichment, financial elder abuse, negligence, and undue influence. Leslee was subsequently appointed guardian ad litem for Rosemary. By 2014, when Rosemary’s deposition was taken, she had little memory of the events involved. When asked about the November 10, 2006, letter insisting the Hunts accept $1 million, she responded: “I’ve never had a million dollars in my life. I must have been cuckoo.”

After a court trial, the trial court ruled in favor of plaintiffs on their financial elder abuse/undue influence claim; it also concluded the breach of fiduciary duty, fraud, and negligence causes of action “basically merge[d] together in the undue influence/elder abuse cause of action.” It awarded plaintiffs $1,399,298.61, which included reimbursement of the $1 million transfer the Hunts contended was a gift to them. The trial court doubled the award pursuant to Probate Code section 859, added prejudgment interest on a portion of the award, and deducted amounts already repaid by the Hunts. It entered judgment against the Hunts in the amount of $3,764,249.73. Hunt appeals, challenging only the portion of the judgment awarding plaintiffs $1 million for the alleged January 2007 gift, and any associated interest, penalties, attorney fees and costs.[2]

DISCUSSION

I. Statute of Limitations

After plaintiffs rested at trial, Hunt moved for judgment pursuant to Code of Civil Procedure section 631.8, contending the statute of limitations on plaintiffs’ claims expired before this action was commenced. The trial court denied the motion. Hunt contends that ruling was in error, and the judgment awarding damages for the $1 million gift must be reversed because plaintiffs’ claim for return of the funds is time barred.

A. Standard of review

“Resolution of the statute of limitations issue is normally a question of fact.” (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 810.) More specifically, belated discovery is a question of fact. (Nguyen v. Western Digital Corp. (2014) 229 Cal.App.4th 1522, 1552 (Nguyen).) When findings of fact are challenged on appeal, we conduct a substantial evidence review, to determine whether there is any substantial evidence, contradicted or uncontradicted, to support the trial court’s findings. (Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 957 (Cahill).) “We must accept as true all evidence and all reasonable inferences from the evidence tending to establish the correctness of the trial court’s findings and decision, resolving every conflict in favor of the judgment.” (Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 631 (Howard).) “An appellant challenging the sufficiency of the evidence to support the judgment must cite the evidence in the record supporting the judgment and explain why such evidence is insufficient as a matter of law. [Citations.] An appellant who fails to cite and discuss the evidence supporting the judgment cannot demonstrate that such evidence is insufficient.” (Rayii v. Gatica (2013) 218 Cal.App.4th 1402, 1408 (Rayii).)

B. Accrual and delayed discovery

Hunt contends the longest limitations period applicable to plaintiffs’ claims is four years, pursuant to Code of Civil Procedure section 343. That section provides a catch-all four-year limitation period, running from accrual of the cause of action, for causes of action for which no other limitations period is provided.^[3] The limitations period of Code of Civil Procedure section 343 has been applied to causes of action based on breach of fiduciary duty (Thomson v. Canyon (2011) 198 Cal.App.4th 594, 606 (Thomson)) and undue influence (Wade v. Busby (1944) 66 Cal.App.2d 700, 702). The statute of limitations on a cause of action for financial abuse of an elder is also four years. (Welf. & Inst. Code, § 15657.7.)

“Civil actions are governed by statutes of limitations that dictate the time period within which a cause of action may be commenced.” (Thomson, supra, 198 Cal.App.4th at p. 604.) Ordinarily, the statute of limitations “begins to run upon the occurrence of the last element essential to the cause of action. The plaintiff’s ignorance of the cause of action, or of the identity of the wrongdoer, does not toll the statute.” (Neel v. Magana, Olney, Levy, Cathcart & Gelfand (1971) 6 Cal.3d 176, 187 (Neel).) “However, by judicial decision or statute, the harshness of this principle has been mitigated in some cases through the so-called delayed discovery rule. [Citation.] Under the delayed discovery rule, ‘the limitations clock only begins to run on certain causes of action when the injured party discovers or should have discovered the facts supporting liability.’ ” (Royal Thrift & Loan Co. v. County Escrow, Inc. (2004) 123 Cal.App.4th 24, 43.)

“ ‘Under the discovery rule, the statute of limitations begins to run when the plaintiff suspects or should suspect that her [or his] injury was caused by wrongdoing, that someone has done something wrong to her [or him].’ [Citation.] In other words, ‘the limitations period begins once the plaintiff “ ‘ “ ‘has notice or information of circumstances to put a reasonable person on inquiry.’ ” ’ ” ’ ” (Nguyen, supra, 229 Cal.App.4th at p. 1551.) The statute of limitations on a financial elder abuse cause of action expressly runs from the time “the plaintiff discovers or, through the exercise of reasonable diligence, should have discovered, the facts constituting the financial abuse.” (Welf. & Inst. Code, § 15657.7.)

The delayed discovery rule generally applies in two situations: (1) when the breach or the resulting injury is of such a nature that it will ordinarily be difficult for the plaintiff to immediately detect or comprehend, either because it is physically hidden (such as a subterranean trespass or a foreign object left in the body after surgery) or because it is “beyond what the plaintiff could reasonably be expected to comprehend” (such as professional negligence, when it is beyond a layperson’s ability to detect or recognize a breach of the professional’s standard of care); or (2) when there is a confidential or fiduciary relationship between the parties, and “application of the discovery rule ‘prevents the fiduciary from obtaining immunity for an initial breach of duty by a subsequent breach of the obligation of disclosure.’ ” (Evans v. Eckelman (1990) 216 Cal.App.3d 1609, 1614–1615 (Evans).) “Where the facts adequately allege breach of fiduciary duty or undue influence, the courts will allow a date-of-discovery rule to be applied, ‘ “when strict adherence to the date of injury rule would result in unfairness to the plaintiff and would encourage wrongdoers to mislead their fiduciary to delay bringing suit. It is particularly appropriate when the defendant maintains custody and control of a plaintiff’s property or interests.” ’ ” (Estate of Young (2008) 160 Cal.App.4th 62, 77.)

1. Delayed discovery

Hunt argues that, even if the delayed discovery rule applies, there was no occasion for late discovery in this case, because Rosemary herself made the gift to Hunt; accordingly, she had actual knowledge of the gift when it occurred in January 2007, and that knowledge started the statute of limitations running. Therefore, the four-year limitations period expired before the petition was filed in August 2013.

Under the delayed discovery rule, “ ‘accrual is postponed until the plaintiff “discovers, or has reason to discover, the cause of action.” [Citation.] Discovery of the cause of action occurs when the plaintiff “has reason . . . to suspect a factual basis” for the action.’ ” (Nguyen, supra, 229 Cal.App.4th at p. 1538.) The plaintiff must have a suspicion of the generic elements of a cause of action: wrongdoing, causation, and harm. (Id. at p. 1552.)

Here, plaintiffs alleged the $1 million transfer to Hunt was brought about through Hunt’s wrongful conduct, including breach of fiduciary duty, undue influence, and financial elder abuse. The wrongful conduct was not the making of the gift itself, which was done by Rosemary. The wrongful conduct was that of Hunt: allegedly breaching his fiduciary duties to Rosemary or imposing his will on her through undue influence, to gain an advantage and obtain her property. Under the delayed discovery rule, the discovery of Hunt’s wrongful conduct and the harm it caused, rather than Rosemary’s alleged gift alone, was necessary to trigger the running of the statute of limitations.

As appellant, Hunt bears the burden of demonstrating that there is no substantial evidence in the record supporting the trial court’s determinations that the delayed discovery rule applied and that the statute of limitations did not bar plaintiffs’ action. (Rayii, supra, 218 Cal.App.4th at p. 1408.) To meet his burden, he is required to address the evidence in the record supporting those findings, and explain why it is insufficient to establish them. (Ibid.) Hunt’s briefs address only evidence of Rosemary’s knowledge that the gift was made. They do not address when Rosemary or her representatives discovered the facts of Hunt’s wrongdoing—i.e., the conduct the trial court found constituted breach of fiduciary duties, undue influence, and financial elder abuse—that resulted in the gift.

Consequently, Hunt has not met his burden of establishing that the trial court’s findings on late discovery and the statute of limitations issue are not supported by substantial evidence.

2. Effect of fiduciary relationship

“ ‘As a general rule, the statute of limitations does not run where the parties occupy a fiduciary relationship toward each other and the relationship has not been repudiated or terminated by the parties.’ ” (Morris v. Berman (1958) 159 Cal.App.2d 770, 794–795.) Further, “ ‘[w]here a fiduciary obligation is present, the courts have recognized a postponement of the accrual of the cause of action until the beneficiary has knowledge or notice of the act constituting a breach of fidelity. [Citations.] The existence of a trust relationship limits the duty of inquiry. “Thus, when a potential plaintiff is in a fiduciary relationship with another individual, that plaintiff’s burden of discovery is reduced and he is entitled to rely on the statements and advice provided by the fiduciary.” ’ ” (WA Southwest 2, LLC v. First American Title Ins. Co. (2015) 240 Cal.App.4th 148, 157.) “ ‘ “ ‘ “[The limitations period] is intended to run against those who are neglectful of their rights and who fail to use reasonable and proper diligence in the enforcement thereof. . . .” ’ It is not the policy of the law to unjustly deprive one of his remedy.” ’ ” (Evans, supra, 216 Cal.App.3d at p. 1617.)

Hunt argues that, even when a fiduciary relationship exists between the parties, the statute of limitations begins to run when the injured party has knowledge of the breach. He again argues that, because Rosemary made the gift herself, she had knowledge of her claim immediately and the delayed discovery rule did not apply. Again, however, the wrongful conduct was not Rosemary making the gift, but Hunt wrongfully using his position of trust and influence to obtain it. Hunt again does not discuss the evidence regarding when and how plaintiffs discovered Hunt’s wrongful conduct. Consequently, he has failed to carry his burden of demonstrating that there is no substantial evidence in the record to support the trial court’s conclusion that the statute of limitations did not bar plaintiffs’ action.

3. Discovery by attorney

Hunt argues that, even if the delayed discovery rule applies, plaintiffs’ claims are still barred by the statute of limitations. He contends that, in late 2007, Rosemary retained attorney Kochenderfer to prepare a trust for her (the LJE Trust). At that time, Kochenderfer had “complete access to Rosemary and her Edward Jones accounts.” Hunt concludes Kochenderfer should have discovered the $1 million transfer “at least some time in 2008 and taken immediate action.”

The portions of the record Hunt cites as proof Kochenderfer had “complete access” to Rosemary and her Edward Jones accounts do not support that statement. Hunt cites us to a portion of plaintiffs’ points and authorities in support of a pretrial motion, two letters from Kochenderfer to Rosemary and Hunt, which were attached as exhibits to the points and authorities, and a portion of the declaration of Kochenderfer submitted in support of the same motion. Hunt has not directed us to any portion of the record indicating any of those documents was admitted as evidence at trial. Further, the documents cited say nothing about Kochenderfer’s access to Rosemary’s Edward Jones accounts. Additionally, they indicate that much of Kochenderfer’s communication with Rosemary was carried on through Hunt, or with Hunt present while Kochenderfer spoke with Rosemary. Hunt has cited nothing in the evidence presented at trial indicating Kochenderfer was put on notice of facts giving rise to Rosemary’s cause of action at any time prior to 2013, when the $1 million transfer to the Hunts’ Edward Jones account was discovered during Booker’s accounting.

We conclude Hunt has not demonstrated the trial court erred in finding the statute of limitations did not bar plaintiffs’ claims.

II. Laches

Hunt contends plaintiffs’ claims are barred by laches. “Laches is an equitable defense to the enforcement of stale claims. It may be applied where the complaining party has unreasonably delayed in the enforcement of a right, and where that party has either acquiesced in the adverse party’s conduct or where the adverse party has suffered prejudice thereby that makes the granting of relief unfair or inequitable.” (In re Marriage of Fogarty & Rasbeary (2000) 78 Cal.App.4th 1353, 1359.) “ ‘Laches implies that the plaintiff should have done something earlier.’ [Citation.] Whether the plaintiff should have acted sooner depends on the circumstances of the particular case.” (Bono v. Clark (2002) 103 Cal.App.4th 1409, 1418 (Bono).) “Generally speaking, the existence of laches is a question of fact to be determined by the trial court in light of all of the applicable circumstances, and in the absence of manifest injustice or a lack of substantial support in the evidence its determination will be sustained.” (Miller v. Eisenhower Medical Center (1980) 27 Cal.3d 614, 624.) Thus, we review the trial court’s laches ruling for manifest injustice and lack of substantial evidence supporting it. (Bono, at p. 1417.)

The trial court weighed the facts and circumstances surrounding the discovery of plaintiffs’ claims and the filing of this action. It concluded Hunt was in a fiduciary relationship with Rosemary beginning in 2005, when he prepared, had Rosemary sign, and had notarized the power of attorney and the personal and financial administrator document. After execution of those documents, although Rosemary moved to California, Hunt remained in Montana, assisting in the probate of Martin’s estate on her behalf. Her funds remained in the Edward Jones accounts in Montana; Hunt monitored the accounts, reviewed her account statements, invested Rosemary’s funds, advised Rosemary on financial matters, and made daily telephone calls to her. The trial court found the fiduciary relationship continued until 2012, and Rosemary was so dependent on Hunt that she was in no state of mind to question his actions, during that time.

The trial court concluded Leslee was kept out of Rosemary’s financial affairs; as late as 2012, Hunt reassured her Rosemary’s investments were earning good interest and were protected. Leslee had no reason to investigate Rosemary’s financial matters “until, at the earliest, 2011.”

The trial court found the documentation concerning Rosemary’s finances was in Hunt’s possession. Any delay in discovery and litigation of plaintiffs’ claims was the result of Hunt’s actions and concealments. The trial court also concluded that, while Rosemary’s memory was failing, she was not totally incompetent at the time her deposition was taken. Consequently, Hunt was not so prejudiced that the doctrine of laches should be applied to deny plaintiffs the right to bring this action.

Hunt complains he was prejudiced by the delay in litigation because “not only have the memories faded but Rosemary eventually lost her mental capacities.” Laches requires both unreasonable delay and prejudice, however. The trial court found it was Hunt’s actions and concealments—including his silence about the alleged gift and the mismanagement of Rosemary’s financial affairs—that caused the delay in discovery of plaintiffs’ causes of action. Once plaintiffs became suspicious that Hunt might be mishandling Rosemary’s funds, Rosemary appointed Leslee as trustee of the LJE trust instead of Hunt, Rosemary’s attorney and accountant began to review the records of Hunt’s activities on Rosemary’s behalf, and plaintiffs commenced this action approximately three months after the investigation revealed the $1 million transfer of funds to the Hunts. The trial court did not find the delay was unreasonable. Hunt has not shown the delay in commencing this action was unreasonable as a matter of law.[4] Accordingly, he has failed to establish any error in the trial court’s conclusion that laches did not bar plaintiffs’ claims.

III. Substantial Evidence of Undue Influence

In addressing the claimed insufficiency of the evidence to support the finding of undue influence, we resolve all conflicts in the evidence in favor of the prevailing party and indulge all reasonable inferences to uphold the finding. (Estate of Peters (1970) 9 Cal.App.3d 916, 918 (Peters).) We determine whether, on the entire record, there is any substantial evidence, contradicted or uncontradicted, to support the trial court’s decision. (Howard, supra, 72 Cal.App.4th at pp. 630–631.) “We must accept as true all evidence and all reasonable inferences from the evidence tending to establish the correctness of the trial court’s findings and decision, resolving every conflict in favor of the judgment.” (Id. at p. 631.) “ ‘Substantial evidence’ … means the evidence must be of ponderable legal significance, reasonable, credible, and of solid value.” (Cahill, supra, 194 Cal.App.4th at p. 958.) “ ‘The substantial evidence [standard of review] applies to both express and implied findings of fact made by the superior court in its statement of decision rendered after a nonjury trial.’ ” (Ibid.)

“[U]ndue influence involves the use of excessive pressure to persuade one vulnerable to such pressure.” (Odorizzi v. Bloomfield School Dist. (1966) 246 Cal.App.2d 123, 131 (Odorizzi).) It “occurs whenever there results ‘that kind of influence or supremacy of one mind over another by which that other is prevented from acting according to his own wish or judgment, and whereby the will of the person is overborne and he is induced to do or forbear to do an act which he would not do, or would do, if left to act freely.’ [Citation.] Undue influence involves a type of mismatch which our statute calls unfair advantage.” (Id. at p. 132.)

In the context of consent to a contract, Civil Code section 1575 provides:

“Undue influence consists:

“1. In the use, by one in whom a confidence is reposed by another, or who holds a real or apparent authority over him, of such confidence or authority for the purpose of obtaining an unfair advantage over him;

“2. In taking an unfair advantage of another’s weakness of mind; or,

“3. In taking a grossly oppressive and unfair advantage of another’s necessities or distress.”

This definition has also been applied to gifts. (Estate of Truckenmiller (1979) 97 Cal.App.3d 326, 330–331, fn. 1.)

Under the elder abuse statutes, financial abuse includes taking, secreting, appropriating, obtaining, or retaining property of an elder (a person age 65 or older) by undue influence. (Welf. & Inst. Code, §§ 15610.07, 15610.27, 15610.30.) Undue influence is defined as “excessive persuasion that causes another person to act or refrain from acting by overcoming that person’s free will and results in inequity.” (Welf. & Inst. Code, § 15610.70, subd. (a).)

“What constitutes undue influence and what constitutes sufficient proof thereof depend upon the facts and circumstances of each particular case. It ‘is a species of constructive fraud which the courts will not undertake to define by any fixed principles, lest the very definition itself furnish a finger-board pointing out the path by which it may be evaded.’ ” (Sparks v. Sparks (1950) 101 Cal.App.2d 129, 135.) “Indeed, there are no fixed definitions or inflexible formulas.” (Keithley v. Civil Service Bd. (1970) 11 Cal.App.3d 443, 451 (Keithley).)

The evidence of undue influence need not be direct, but may be circumstantial. (Estate of Baker (1982) 131 Cal.App.3d 471, 481 (Baker).) “[D]irect evidence of undue influence is rarely obtainable and, thus the court is normally relegated to determination by inference from the totality of facts and circumstances.” (Keithley, supra, 11 Cal.App.3d at p. 451.) Courts have looked at a number of circumstances in determining whether a transaction or property transfer was the result of undue influence. These include the mental and physical condition of the transferor, any fiduciary relationship between the parties (Estate of Teel (1944) 25 Cal.2d 520, 527 (Teel)), the beneficiary’s control over the transferor’s business affairs, the transferor’s dependency on the beneficiary for care and attention, domination on the part of the beneficiary and subserviency on the part of the transferor (Baker, at p. 481), “long delay in disclosing an alleged transfer, or the fact that there was no disclosure until after the death of the donor” (Bohn v. Gruver (1931) 111 Cal.App. 386, 394), a relationship between the parties that made the transferor “peculiarly susceptible to the exertion of influence by the” beneficiary (Longmire v. Kruger (1926) 80 Cal.App. 230, 239 (Longmire)), the absence of independent advice on the transaction (Brown v. Canadian Industrial Alcohol Co. (1930) 209 Cal. 596, 599), and activity of the beneficiary that procured the transaction (Teel, at p. 528).

In the context of a challenge to the disposition of property by will, the court has considered these indicia of undue influence: “ ‘(1) The provisions of the will were unnatural. . . . (2) the dispositions of the will were at variance with the intentions of the decedent, expressed both before and after its execution; (3) the relations existing between the chief beneficiaries and the decedent afforded to the former an opportunity to control the testamentary act; (4) the decedent’s mental and physical condition was such as to permit a subversion of his freedom of will; and (5) the chief beneficiaries under the will were active in procuring the instrument to be executed.’ ” (Estate of Lingenfelter (1952) 38 Cal.2d 571, 585.)

The elder abuse statutes recognize the following as factors to be considered in determining whether a transaction was produced by undue influence:

“(1) The vulnerability of the victim. Evidence of vulnerability may include, but is not limited to, incapacity, illness, disability, injury, age, education, impaired cognitive function, emotional distress, isolation, or dependency, and whether the influencer knew or should have known of the alleged victim’s vulnerability.

“(2) The influencer’s apparent authority. Evidence of apparent authority may include, but is not limited to, status as a fiduciary, family member, … or other qualification.

“(3) The actions or tactics used by the influencer. Evidence of actions or tactics used may include, but is not limited to, all of the following:

“(A) Controlling necessaries of life, medication, the victim’s interactions with others, access to information, or sleep.

“(B) Use of affection, intimidation, or coercion.

“(C) Initiation of changes in personal or property rights, use of haste or secrecy in effecting those changes, effecting changes at inappropriate times and places, and claims of expertise in effecting changes.

“(4) The equity of the result. Evidence of the equity of the result may include, but is not limited to, the economic consequences to the victim, any divergence from the victim’s prior intent or course of conduct or dealing, the relationship of the value conveyed to the value of any services or consideration received, or the appropriateness of the change in light of the length and nature of the relationship.” (Welf. & Inst. Code, § 15610.70, subd. (a).)

A. Age, mental condition, emotional distress, isolation

The trial court concluded that, at the time of the gift, Rosemary “was extremely vulnerable … primarily due to emotional distress, age, a degree of isolation and dependency upon” Hunt. The evidence supports that finding. At the time of Martin’s death in May 2005, Rosemary was 83 years old. There was no evidence Rosemary was suffering from cognitive difficulties at that time. There was, however, evidence of Rosemary’s emotional distress, grief, and isolation after Martin’s death. Hunt testified Rosemary was “devastated” by Martin’s death. Hunt had the impression she was overwhelmed, being left alone to deal with the problems of the death, including probate and finances. Rosemary had lost both her children, was alone where she knew nobody, and was living on a 20-acre parcel away from town. Hunt opined that, at her age, in those circumstances, he would have been “ ‘scared to death.’ ” Jodie Hunt testified that, at the time of the gift, Rosemary was still grieving. Leslee believed the alleged gift was the result of grief and “not characteristic” of Rosemary.

B. Fiduciary or confidential relationship

“ ‘Confidential and fiduciary relations are, in law, synonymous, and may be said to exist whenever trust and confidence is reposed by one person in the integrity and fidelity of another.’ ” (Peters, supra, 9 Cal.App.3d at p. 920.) “[A] confidential relationship may exist whenever a person with justification places trust and confidence in the integrity and fidelity of another.” (Odorizzi, supra, 246 Cal.App.2d at p. 129.) “ ‘efore a person can be charged with a fiduciary obligation, he must either knowingly undertake to act on behalf and for the benefit of another, or must enter into a relationship which imposes that undertaking as a matter of law.’ ” (City of Hope National Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 386.)

[b] C. Dependence

The trial court concluded Hunt prepared the power of attorney and personal and financial administrator document, and had them signed by Rosemary and notarized, the day before Rosemary left Montana. The documents gave Hunt broad power to act on Rosemary’s behalf in financial matters. The trial court rejected “Hunt’s suggestion that these documents were dictated by [Rosemary] from an Edward Jones document” as “totally incredible.” Rosemary’s assets remained in the Edward Jones accounts in Montana to be managed by Hunt.

In addition to managing Rosemary’s financial affairs, Hunt cultivated a familial closeness with Rosemary, telephoning her every day for years after she left Montana, and exchanging letters, Christmas cards, and small gifts with her. According to Hunt, by the time probate of Martin’s estate closed, shortly before the gift was made, the Hunts had an “unbelievably strong friendship” with Rosemary, with an “extreme love bond … like mother, son, daughter.” He described himself as Rosemary’s confidant. Leslee testified Rosemary had an “unusual” attachment to Hunt and looked to him for everything; Rosemary placed her complete trust in him, which Leslee believed was the result of grief. This was not characteristic of her grandmother. The trial court found Rosemary was under the control of the Hunts, trusting of them, and dependent upon them. That finding was supported by substantial evidence.

D. Unnatural disposition or disposition at variance with donor’s intent

An unnatural disposition is one which prefers strangers in blood to the natural objects of the donor’s bounty, that is, to members of the donor’s immediate family. (Magee v. State Bar of California (1962) 58 Cal.2d 423, 432; Estate of Straisinger (1967) 247 Cal.App.2d 574, 586.) Rosemary’s closest living relatives were her grandchildren. Rosemary feared her grandsons, and feared retaliation from them if her granddaughters received any of Martin’s estate.

The evidence showed Rosemary intended that her estate should benefit her granddaughters and their families, and Hunt was aware of that intent. As the probate of Martin’s estate was being wrapped up, in Rosemary’s discussions with Cummings about estate planning, she indicated she wished to do something to benefit her granddaughters; there was no mention of the Hunts. Cummings advised her about making gifts to her family.

The trial court noted Rosemary’s handwritten letter and card regarding the $1 million alleged gift both “curiously” bore the same date. They contained substantial almost identical language, although the letter was longer and contained additional information. The trial court observed that, although there was no direct evidence to support plaintiffs’ theory that Hunt dictated the two writings, in light of all the circumstances and the language of the longer writing, “that conclusion can be reached.” The letter discussed threats one grandson made against Leslee and Jennifer, and stated both granddaughters had “expressed their decision of refusing the acceptance of Martin’s estate money (upon [Rosemary’s] death) for fear of the threats he made to them and their children.”

Although the letter and card insisting the Hunts accept $1 million were dated shortly before Rosemary’s discussions with Cummings about estate planning and gifts, Rosemary did not mention to Cummings any intent to make such a sizable gift to the Hunts. She mentioned only her three granddaughters, Leslee’s family, and Jennifer’s significant other as the planned gift recipients. Despite the representation in Rosemary’s November 10, 2006, letter to the Hunts that Leslee and Jennifer had decided to refuse to accept any money from Martin’s estate, when the probate proceeding concluded, Rosemary expressed to Cummings an interest in making gifts to her granddaughters. She subsequently did make gifts of $12,000 each to the granddaughters and their families, in December 2006 and again in January 2007.

Hunt testified that, after Rosemary’s November 10, 2006, letters, he started thinking about the granddaughters’ refusal of money from Martin’s estate because of their fear of the grandsons. He realized that, if Rosemary died, Martin’s estate, which was worth $2.2 million, would likely go to someone outside the family. Rosemary was considering making donations to charities instead of gifts to the granddaughters. Hunt explained to Rosemary that she could make long-term real estate investments, the type he had been making for 40 years, and the checks coming into her bank account would be hard to trace to Martin’s estate. This would allow her granddaughters to receive monthly checks rather than lump sums,[5] and the grandsons would not know because it would be done through several accounts. Hunt claimed he changed Rosemary’s mind; he told her that, if she did this over a long period of time, the grandsons would not know and she could do what she wanted with the money. Hunt added that, “because of my benevolence in … bringing [Rosemary] to her senses about distributing money that she wanted to,” Leslee received $48,000 and, a week later, another $48,000 of Martin’s money.[6]

The trial court found Rosemary’s “intentions in regard to her finances were to provide for her granddaughters,” and the Hunts were aware of this. There was evidence Rosemary intended that her granddaughters, the natural objects of her bounty, benefit from Martin’s estate. She expressed no other intent to attorney Cummings, when he advised her about gifts and estate planning. The alleged gift to the Hunts of almost one-half of Martin’s estate, when Rosemary had known them for only a couple of years, was at variance with that intent. The trial court concluded Rosemary “was not that wealthy a person and obviously did not live a life style that would coincide with such generosity. Her clear desire has been to care for her granddaughters and no $1,000,000 check was written to them.” Thus, there was substantial evidence of a disposition of the $1 million that was unnatural and at variance with Rosemary’s intent as expressed to others.

E. Lack of disclosure and independent advice

There was no evidence Rosemary received independent legal advice about the alleged $1 million gift before she made it. Although Rosemary spoke with Cummings about estate planning and making gifts, the discussion was about potential gifts to the granddaughters and their families, and possibly to the grandsons; there was no discussion of any gift to the Hunts.

By November 10, 2006, the date of the letter and card regarding the $1 million gift, Hunt had been acting on behalf of Rosemary, assisting her with the probate proceeding, the management and sale of Martin’s properties, and her finances for over a year. He admitted he knew he was required to act in her best interest. Nonetheless, when he received the letter and card, he did not recommend to Rosemary that she consult Cummings or seek other legal advice before making the proposed gift. In his communications with Cummings, Hunt did not mention that Rosemary was considering making a $1 million gift or ask that Cummings talk with her about the proposed gift.

Further, once the alleged gift was made, Hunt did not ensure that Rosemary informed either Cummings or her accountant. Rosemary’s November 10, 2006, letter ended: “I’m aware that this is a gift and I will assume the tax obligation.” Despite that assurance, neither Rosemary nor Hunt mentioned the gift to her estate planning attorney or to her accountant so that either, or both, could take the steps necessary to “assume the tax obligation.”

Because of that lack of disclosure, Rosemary’s granddaughters, attorneys, and accountants did not discover the $1 million transfer until 2013, after Rosemary’s memory had begun to fail. By the time her deposition was taken, Rosemary could not recall making the alleged gift, or even having $1 million to give.

The trial court found: “This failure of disclosing to attorney Cummings is clear evidence of secretion and a tacit admission that [the Hunts] knew what was occurring was wrong. [¶] The fact that the actual transfer of funds was delayed until attorney Cummings had completed his services to [Rosemary] is too convenient.” The trial court’s findings on this factor, and the substantial evidence supporting them, support the trial court’s conclusion the $1 million purported gift was the product of undue influence.

F. Use of affection, intimidation, or coercion

The trial court found the Hunts “established a pseudo familial relationship” with Rosemary. They “provided solace and comfort as well as financial advice to [Rosemary]. As time progressed they assumed a pseudo mother/child relationship with [Rosemary], basically filling the void of her deceased son. … Hunt referred to their relationship as ‘ … like mother, son and daughter.’ ” When Rosemary made $12,000 gifts to her granddaughters and their families in December 2006 and January 2007, she also made equivalent gifts to the Hunts. In addition, however, she made a $1 million alleged gift only to the Hunts. Regarding the $1 million, the trial court concluded Rosemary’s lifestyle did not coincide with giving such a generous gift.

The personal and financial administrator document provided that “compensation for services rendered will be at my timing and discretion.” (Capitalization omitted.) Although he typed that document, Hunt testified he never asked for or expected any compensation for services provided under it. He testified Rosemary tried on many occasions to compensate him, but he refused; he acted as a friend helping his best friend’s mother, not for compensation. He did not keep any record of the time he spent helping Rosemary. The trial court noted Leslee’s testimony that her grandmother was the type who would expect to pay for services provided to her. The November 10, 2006, letter concerning the $1 million gift expressed Rosemary’s desire to repay Hunt for his help with the probate proceeding.

There was evidence from which the trial court could infer Hunt exaggerated the value of his assistance in the probate proceedings. Hunt testified he assisted in the sale of Martin’s real property in Montana. He recommended a realtor and came up with a price. Penny’s family wanted to accept the first offer, but, on his advice, Rosemary refused it. The property later sold for $220,000 more than the first offer. Martin, along with two partners, also owned a commercial building in San Diego. Hunt assisted in the sale of Martin’s interest in that property to the other partners. The partners offered $1.2 million, but Hunt advised Rosemary it was not enough. The partners bought Martin’s interest for $1.7 million.

Hunt also testified he assisted in Rosemary’s purchase of a house a few years after she moved back to California. He claimed the asking price was $285,000, but he negotiated it down to $195,000; he had an agreement with Rosemary that she would pay him 60 percent of any savings on the price. He indicated she saved more than $70,000, so his compensation was to be $42,000. The realtor who listed the house for sale, however, testified the original asking price was $239,000 and the asking price on the date of the purchase agreement was $219,000.

Thus, there was evidence supporting an inference Hunt exaggerated the value of his services to Rosemary, and used Rosemary’s affection for him, her dependence on him, and her feeling of indebtedness to him in order to obtain the $1 million purported gift, which far exceeded the value of the services he performed.

G. Equity of the result

“Evidence of the equity of the result may include, but is not limited to, the economic consequences to the victim, any divergence from the victim’s prior intent or course of conduct or dealing, the relationship of the value conveyed to the value of any services or consideration received, or the appropriateness of the change in light of the length and nature of the relationship.” (Welf. & Inst. Code, § 15610.70, subd. (a)(4).)

As a result of the alleged gift, Rosemary lost $1 million from her estate, which was approximately 30 percent of its value as of December 31, 2006. The purported gift diverged from the intent Rosemary expressed to the probate and estate planning attorney with whom she discussed making gifts after the close of the probate proceeding. Despite the November 10, 2006, letter and its representation that Leslee and Jennifer would refuse money from Martin’s estate, the intent Rosemary expressed in early December 2006, was to make gifts to her granddaughters, great grandchildren, a spouse, and a significant other. There was no mention to the attorney of any gifts to the Hunts. The value of the purported gifts to the Hunts was far in excess of the value of the services performed by Hunt. We note that, for his work on Rosemary’s behalf after the alleged $1 million gift, including his work as trustee of the LJE Trust, Hunt was compensated a maximum of $1,000 per month ($12,000 per year), for what he described as “a tremendous amount of work.” After 18 months assisting the attorney and accountant with the probate proceeding, Hunt received $1,048,000.

Regarding their relationship, Rosemary had met the Hunts only a couple of times prior to Martin’s death in May 2005. By September 29, 2005, Rosemary had signed the power of attorney and the personal and financial administrator document, giving Hunt virtually complete control of Rosemary’s financial affairs. At the time of the gift, Rosemary had known Hunt less than two years.

In light of the evidence, this factor supports the conclusion Hunt obtained the alleged gift by undue influence.

H. Fulfillment of intent

Citing Estate of Molera (1972) 23 Cal.App.3d 993, 1001 (Molera), Hunt argues that, even if it can be said that one or more transactions were procured by undue influence, the transaction in question would remain valid so long as it was not inconsistent with Rosemary’s intent and can be separated from the invalid transactions. The Molera case addressed a will contest in which relatives of the decedent alleged certain portions of the will were included as a result of the undue influence of the attorney who drafted the will. (Id. at pp. 996, 1000.) The court stated: “It is the general rule that if the whole will is the result of the presence of undue influence, the will is totally invalidated; but if only a part of the will was thus procured, that part may be rejected as void, but the remainder, which is the outcome of the testator’s free will, is valid if it is not inconsistent with and can be separated from the part which is invalid.” (Id. at p. 1001.) For example, “a separate, distinct and independent residuary clause which was not induced by undue influence will stand even though bequests to some persons named therein were procured by undue influence.” (Ibid.)

In Molera, the distinction was between portions of the will that were the result of undue influence and portions that were not. The rule applied in that case did not allow the court to hold valid a will provision that was the result of undue influence, whether the provision was consistent with the testator’s intent or not.

Here, there is only one gift in issue. If it was obtained by undue influence, it must be invalidated; if not, then it must stand. The test is whether it was the product of Hunt’s undue influence, rather than Rosemary’s free will, not whether the gift was “not inconsistent with Rosemary’s intent.”

Hunt argues that Rosemary fulfilled her expressed intent by making the $1 million gift. Leslee and Jennifer stated they did not want money from Martin’s estate and Rosemary was concerned about the violence of her grandsons if they learned the granddaughters received a large amount of Martin’s estate through Rosemary. Hunt asserts he helped Rosemary “find a way to ensure that the bulk of Martin’s estate would find its way to Rosemary’s granddaughters in a way that would not be discovered by Rosemary’s violent grandsons.” Because he achieved that goal, “Rosemary rewarded him for it with a generous gift that left the bulk of Martin’s estate intact for” the granddaughters.

The evidence does not support that argument. Hunt himself testified that, after he received the November 10, 2006, letter, in which Rosemary stated that Leslee and Jennifer did not want Martin’s money because they were afraid of their cousins, Hunt began thinking about alternatives that would keep the money from going to charity or to someone outside the family. Rather than a lump sum to the granddaughters on Rosemary’s death, he suggested long-term real estate investments, which would result in monthly checks to Rosemary’s checking account that would be hard for anyone to trace back to the large amount of money generating the deposits. Based on Hunt’s own testimony, the $1 million alleged gift could not have been intended by Rosemary as a reward for Hunt finding a way to pass Martin’s estate on to the granddaughters without her grandsons knowing, because Hunt admittedly had not yet thought about that plan when Rosemary expressed her intent to make the alleged gift. Further, it is questionable whether giving the Hunts a generous gift of almost one-half of Martin’s estate either kept the money from going to someone outside the family or left “the bulk” of the estate intact for the granddaughters.

I. Procurement of transaction

Hunt cites language from Estate of Kreher (1951) 107 Cal.App.2d 831, 839, which the court presented as “[t]he rules applicable to proof of undue influence in a will contest . . . [and] the creation of joint tenancies.” The court stated: “In order to set aside a joint tenancy agreement on the ground of undue influence, it is necessary to establish that the influence was such as to destroy the free agency of the party claimed to have been unduly influenced. It is not sufficient to prove general influence, however strong and controlling, but it must be shown that the influence was used directly to procure the joint tenancy.” (Ibid.) Hunt argues plaintiffs failed to show his influence was used directly to procure the gift.

More recently, however, the court in David v. Hermann (2005) 129 Cal.App.4th 672, stated: “ ‘The proof of undue influence by circumstantial evidence usually requires a showing of a number of factors which, in combination, justify the inference, but which taken individually and alone are not sufficient.’ [Citation.] Among the indicia of undue influence is evidence that ‘ “the chief beneficiaries under the will were active in procuring the instrument to be executed.” ’ ” (Id. at p. 684.) When certain circumstances are present, including procurement of the instrument by the person who allegedly exerted undue influence, a presumption of undue influence may arise. (Ibid.) The David court concluded:

“Thus, while evidence of procurement is highly probative of undue influence and figures repeatedly in judicial discussions of the principle, it is essential to proof of undue influence only if the court relies on the presumption of undue influence to shift the burden of proof to the proponent of the testamentary instruction. In the case at bar, the court did not rely on the presumption, but rather applied the general principle of undue influence to a review of all the evidence. Appellant cannot challenge the court’s finding of undue influence by showing only the weakness or absence of evidence of procurement; other factors in combination can also support this finding. To challenge the finding, she must show that the evidence as a whole does not satisfy the general standard for proof of undue influence.” (David, supra, 129 Cal.App.4th at pp. 684–685.)

The trial court in the case before us did not rely on the presumption of undue influence. Thus, evidence of procurement of the gift was just one of the factors for the trial court to consider.

There was circumstantial evidence from which procurement could be inferred. There was testimony concerning Rosemary’s dependence on Hunt. She gave him the power of attorney and the personal and financial administrator document, authorizing him to sign on her behalf in all personal and financial matters, and to approve and manage all financial matters related to her estate. Hunt was in charge of Rosemary’s finances; all her trust was in him. Rosemary looked to him for everything, to the exclusion of her family members, such as Leslee. Hunt spoke to Rosemary daily even after she moved from Montana.

Hunt claimed that, after Rosemary mentioned in her November 10, 2006, letter that Leslee and Jennifer did not wish to accept any of Martin’s money because of their fear of Rosemary’s grandsons, Hunt changed Rosemary’s mind about not giving any of Martin’s estate to her granddaughters and their families. He bragged that he was “the one that changed her mind” and that, “because of [his] benevolence in . . . bringing [Rosemary] to her senses about distributing money that she wanted to,” the granddaughters and their families received $12,000 gifts from Martin’s money. Thus, there was evidence Hunt wielded enough influence over Rosemary that he not only was able to, but did, change Rosemary’s mind about the disposition of Martin’s estate.

Additionally, there was evidence Hunt concealed the $1 million purported gift from those who might question Hunt’s influence in obtaining it. The proposed gift was not mentioned in estate planning discussions with Cummings, despite the November 10, 2006, letter and card. Although Rosemary’s letter had stated she would “assume the tax obligation” on the gift and Cummings’ letter noted a gift over $12,000 would have tax consequences, neither Rosemary nor Hunt told Cummings about the gift. Neither disclosed the gift to Booker, even when he sent Rosemary a tax organizer to collect information for Rosemary’s 2007 tax return, and it inquired whether she had made any gifts over $12,000 that year. Hunt contends that, as the recipient of the gift, he had no obligation to report it for tax purposes. Hunt also occupied a fiduciary position, however, assisting Rosemary with her financial affairs, and he failed to disclose the gift to her attorney or accountant in that capacity.

Even in 2013, when Booker was reviewing Rosemary’s bank records and inquired by email about several items, including the $1 million transfer from Rosemary’s Edward Jones account to the Hunts’ account, Hunt’s response was evasive. He did not immediately identify the $1 million transfer as a gift to the Hunts. He suggested having a conversation that included Rosemary, and assured Booker that “all [Rosemary] inherited is alive and well and working for her through my investments.” Subsequently, Hunt told Booker, “You need to ask Rosemary about the money transfer—it was not a loan—it was for the first attempt [at] a refused gift—it was finally a[n] insistence.” Hunt’s concealment and reluctance to disclose the $1 million purported gift “is a suspicious circumstance which tends to indicate guilty conscience of unfair means resorted to in procuring” the transaction. (Longmire, supra, 80 Cal.App. at p. 241.)

Thus, there was sufficient circumstantial evidence from which the trial court could infer that Hunt used his influence with Rosemary, which arose out of her dependence on him, as well as her gratitude and sense of obligation to him, to overbear her will and procure the alleged gift by undue influence.

J. Conclusion

The trial court’s determination that the $1 million purported gift to the Hunts was the result of Hunt’s exercise of undue influence on Rosemary was supported by many of the factors relevant to such a determination. Substantial evidence supports the trial court’s findings on those factors, as well as its finding that the gift was the result of Hunt’s undue influence.

DISPOSITION

The judgment is affirmed. Plaintiffs are entitled to their costs on appeal.

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HILL, P.J.

WE CONCUR:

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DETJEN, J.

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FRANSON, J.