Wright v. Wright

Filed 7/31/07 Wright v. Wright CA2/1

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

SECOND APPELLATE DISTRICT

DIVISION ONE

APPEAL from a judgment of the Superior Court of Los Angeles County. Judith C. Chirlin, Judge. Affirmed.

Deems Law Offices and Joseph E. Deems for Appellant.

Sacks, Glazier, Franklin & Lodise, Kenneth M. Glazier and Matthew W. McMurtrey for Respondent.

_________

After a bench trial, the court ordered a partition by sale of a residence owned by the trust of Mabel Wright (Mabel) and the trust of her deceased husband, George Wright (George). The court rejected Mabels attempt to enforce a life estate in the residence under an oral agreement with George. On appeal from the judgment, Mabel challenges the sufficiency of the evidence, the trial courts rulings on statutes of limitations defenses to Mabels claims, and an order bifurcating a legal malpractice action against the lawyer involved in drafting the trusts for George and Mabel. We affirm the judgment.

BACKGROUND

A. Trial Testimony and Exhibits

Mabel and George married in April 1984 when he was 71 and she was 69. Mabel had a son and George had two sons from their respective prior marriages. Mabel owned (and still owns) a residence in Los Angeles, where her son lived. George owned a residence in Massachusetts. In September 1984, George and Mabel purchased a residence on Burnside Avenue in Los Angeles (Burnside) for $166,000. George sold his home in Massachusetts and contributed $155,000 (about 93 percent) to the purchase of Burnside; Mabel contributed $11,000 (about 7 percent). Burnside was purchased from an executor of an estate through a probate court sale. The executor filled out the bid form for Mabel and George. The bid form stated that the Wrights were to hold title as joint tenants, and they received a joint tenancy grant deed to Burnside. At that time Mabel did not think about the issue of who would own the house if George died. Neither Mabel nor George understood the consequences of holding title in joint tenancy. George told his son Walbridge Wright (Walbridge) that the joint tenancy deed was a mistake and that their intent was to own an interest in Burnside in proportion to their respective contributions to the purchase price.

Before they purchased Burnside jointly, George was considering purchasing Burnside alone, and Mabel told him that if he purchased it alone, he could live in it alone. In August 1984, when they were preparing for escrow for the purchase of Burnside, George wrote a letter to Mabel outlining various options for taking title, including placing title to Burnside in the names of Georges sons and taking a life tenancy from them. George wrote: What I am after: [] A.  Your security in living in the house, should I predecease you. [] B.  That the proceeds from the house, according to my contributions, be given to [my sons].

Mabel testified that before she and George moved into Burnside, she told George that she did not want to move again and that she wanted to live in Burnside as long as she lived; George agreed.

Before traveling abroad in 1985, George and Mabel consulted attorney Eric Lindquist, the managing director of the firm of Caldwell & Toms, on estate planning matters. Lindquist testified that George and Mabel told him that they wanted their ownership interests in Burnside to reflect the percentage that each contributed to the purchase price. They did not want the survivor to own 100 percent of Burnside. Mabel said that that would be stealing it from [Georges sons]. Both Mabel and George also told Lindquist that they did not want a single trust where each had to consent to any actions by the other; they wanted separate trusts where the administration of each trust would be entirely independent of the other.

Lindquists firm drew up trusts for Mabel and George, as well as grant deeds transferring their respective interests in Burnside to trust, so that Mabels trust owned a 7 percent interest and Georges trust owned a 93 percent interest in Burnside. Each trust contained a Spouses Residence Trust affording the survivor a life estate in Burnside. Each trust provided that it was revocable and subject to amendment at any time during the trustors life. Each trust also stated that the trustors interest in Burnside was the separate property of the trustor and not community property.

Mabel testified in her deposition and at trial that she and George had no agreement pertaining to Burnside other than the terms in their trusts. At trial, Mabel admitted that she understood that Georges trust was revocable.

In March 1997, George found out that Mabel had over $1 million in assets. George did not want to cut out his sons from their inheritance, so he decided to change his trust. The firm of Caldwell & Toms had gone out of business in 1989 and by 1997 Lindquist was a sole practitioner. According to Lindquist, the Caldwell firms attorney-client relationship with the Wrights ceased when the firm went out of business.

In April 1998, without notice to Mabel, Lindquist prepared, and George executed, a restated and amended trust agreement, affording Mabel a right to reside in Burnside for two years after Georges death. Georges sons, Walbridge and Carey Wright, were named as the first alternate cotrustees of Georges trust. Carey Wright died in 2000, leaving Walbridge as the trustee after Georges death. Sometime around 1998, George told Lindquist that George was going to tell Mabel about the changes to his trust and Lindquist said that he supported that. But George did not tell Mabel about the changes to his trust at that time.

According to Mabels expert witness, probate Attorney Frederick Weitkamp, George and Lindquist breached their respective fiduciary duties by failing to inform Mabel of Georges 1998 trust amendments and George and Walbridge breached their fiduciary duties by failing to inform Mabel to seek separate legal counsel in connection with Georges 1998 trust amendments. Although Weitkamp admitted that George had a legal right to change his trust, Weitkamp believed that because of each spouses provision to give the other a life estate in Burnside, George no longer had a right to make a change to that provision. Weitkamp also admitted that his opinion as to Georges fiduciary duty to inform Mabel of the change in his trust was based on the existence of an agreement to give the other a life estate.

George died on January 22, 1999. A week before he died, he handed Mabel two letters. In a letter dated November 12, 1997, George stated that [i]t was not until March of 1997 that I learned of your extreme wealth, and that he had changed my trust to basically allow you the use of . . . Burnside for 2 years from the date of . . . my death, with the stipulation that . . . my estate will file a petition with the court for sale of the property at the end of the 2 year period. In a letter dated January 1, 1999, George referred to a letter from me to you on the use of the house (details in my trust). He also stated, [W]e had some good times and some bad times, but better than living alone.

In February 1999, Lindquist wrote a letter to Mabel stating that he had been retained by Georges sons to assist them in the administration of Georges trust and offering her a copy of the trust if she did not have one. Lindquist also wrote letters on behalf of Walbridge to Mabel in 2000 and 2001. Mabel did not respond to Lindquists February 1999 letter.

According to Walbridge, a week after George died, he asked Mabel if she intended to move out of Burnside in two years, and she said no. Walbridge then told Mabel that they would then have to get the lawyers involved; Walbridge never told Mabel that she could reside in Burnside longer than two years or that she could wait for more than two years to resolve the issue. According to Mabel, she had a conversation with Walbridge about nine months after Georges death in which they discussed the issue of insurance payments and expenses for Burnside and Walbridge told her that they would settle the issue of expenses at the end of the two-year period. Mabel and Walbridge spoke again on January 5, 2001, when Mabel told Walbridge that she would not move out of Burnside by January 22, 2001, and that she had hired an attorney on January 3, 2001. Mabel admitted that Walbridge did not say anything to her that affected her decision whether or not to act within the two-year period of Georges death and that Lindquists September 2000 letter prompted Mabel to take action and to get a lawyer.

B. Pleadings and Procedural Background

In May 2001, Mabel filed a petition in the probate court for a declaration that her filing of a creditors claim and, if necessary, an action on the rejected claim, against the trustee of Georges trust to enforce a right to a life estate would not violate the no contest clause of the trust. The petition was resolved in her favor in October 2001. Mabel filed her claim against Georges estate and when no action was taken, she deemed the claim rejected.

In September 2001, Walbridge, as trustee of Georges trust, filed an action for partition by sale of Burnside. Mabel filed a cross-complaint against Walbridge, as trustee of Georges trust, for damages for waste and ouster, specific performance of the alleged agreement with George for a life estate, and declaratory relief. Because Mabels trial and appellate briefs do not discuss the claim for waste and ouster, we deem this cause of action to be abandoned. (The trial court noted that Mabel appeared to have withdrawn this claim because she offered no evidence on it at trial.)

In December 2001, Mabel filed against Walbridge a verified complaint on creditors claim (creditors claim action), containing causes of action seeking various remedies (damages, imposition of a constructive trust, specific performance and declaratory relief) for breach of a contract to provide a life estate, as well as a cause of action for intentional infliction of emotion distress. As Mabels trial and appellate briefs do not discuss the claim for emotional distress, we deem this cause of action to be abandoned.^[1]

Also in September 2001, Mabel filed a complaint against Lindquist for attorney malpractice and breach of fiduciary duty based on his failure to advise her about actual and potential conflicts of interest in his representing both spouses and in failing to inform her of Georges 1998 trust amendments. Although the malpractice action was initially ordered consolidated with the partition action and the creditors claim action, it was bifurcated after a hearing on October 23, 2003. At the time of the trial on the other two consolidated actions (the partition and creditors claim actions) in September 2005, the malpractice action had not been tried.

At trial, Mabel made an oral motion for leave to amend, conform[ing] to proof, to add a cause of action in the creditors claim action for breach of fiduciary duty and to add a cause of action to her cross-complaint in the partition action seeking an equitable lien on Burnside for a life estate.

After trial, the court issued a comprehensive 19-page statement of decision. The court granted Mabels oral motion to amend her cross-complaint and her creditors claim action. The court found in favor of Walbridge on his complaint for partition and found without merit both Mabels cross-complaint and her creditors claim action, as amended.

The statement of decision provided in pertinent part: Mabels claim that she can continue to reside in the Burnside House for life is based on an alleged irrevocable oral agreement with George. But at trial Mabel failed to meet her burden of proving the existence of such an oral agreement by clear and convincing evidence or even by a preponderance of the evidence. [] In both her deposition and at trial, Mabel admitted that she and George had no agreement other than what was reflected in the two separate Trusts which Mabel and George executed in 1985. . . . Mabel testified that when they bought the house, she had told George that she never wanted to move again and he agreed. But that testimony, ambiguous as it is, does not rise to the level of proof of an oral agreement for a life estate. Furthermore, Mabels testimony in that regard does not constitute clear and convincing evidence in the face of her contrary deposition and trial testimony and in the absence of any corroborating evidence. [] Mabels admission that she had no agreement with George other than as stated in the 1985 Trusts is crucial because both Trusts . . . expressly state that the Trusts can be revoked or amended. [(Fn. omitted.)] Mabel admitted at trial that she read the Trusts, and that she understood that revocable meant that the Trusts could be changed. Because the Trusts clearly were revocable, the Trusts (separately or together) cannot constitute a written irrevocable agreement giving Mabel a life estate in the Burnside House.

The court also rejected Mabels theory that her right to enforce an agreement for a life estate arose because of the change in the Burnside title from joint tenancy to tenants in common. The court noted that Mabel admitted that, notwithstanding the joint tenancy deed, she believed that Georges sons should receive proceeds from the sale of Burnside equal to Georges contribution to the purchase price. The 1985 trusts and grant deeds simply conformed the title to the understanding which Mabel and George had all along. Thus, the court impliedly determined that equity was not on Mabels side because the change in the title to Burnside was simply to correct a mistake and the change did not deprive her of any rights.

The trial court also found that causes of action based on the alleged oral agreement for a life estate were barred by the statute of frauds of Civil Code former section 1624, subdivision (6), and that Mabel failed to establish any basis to support the theory that Walbridge was equitably estopped from asserting the statute of frauds.

With respect to Mabels cross-complaint for specific performance, declaratory relief, and to impose an equitable lien, the court found that these claims were all premised on the existence of a binding oral agreement for a life estate and that Mabel failed to prove such oral agreement. The court also held that the claim for an equitable lien was barred by the one-year statute of limitations of Code of Civil Procedure section 366.2, subdivision (a), because Mabel did not file her action within one year of Georges death.^[2]

With respect to the creditors claim action, the court noted that all of Mabels claims were premised on the existence of an oral contract for a life estate, but that she failed to prove such agreement. Also, Mabel failed to prove the existence of a written contract which would entitle her to any relief here. Further, the court concluded that Mabel failed to prove that she would be entitled to any constructive trust under any theory.

As to Mabels claims for breach of fiduciary duty against George, Walbridge, and Lindquist, based on their failure to give her certain advice and information, the court stated that the claim was barred by the one-year statute of limitations in Code of Civil Procedure section 366.2 and that there were no breaches of any duty that could possibly form the basis for any relief Mabel seeks here. We interpret the latter statement to mean that if there were any breaches of duty, they did not cause Mabel any legally cognizable harm. The court also stated that the opinions of Weitkamp, Mabels expert, on the issues of fiduciary duty were not persuasive because he mistakenly assumed that George and Mabel had a valid oral agreement, and that Walbridge and Lindquist were aware within the statute of limitations period that there was a statute of limitations defense to assert, and because Weitkamp apparently was not aware, however, that Lindquist offered to give a copy of [Georges restated and amended trust] to Mabel in his letter dated February 4, 1999 . . . .

Finally, the court determined that Walbridge was not equitably estopped to assert his statutes of limitations defenses. The court found that the evidence did not support Mabels contentions that communications from George, Walbridge or Lindquist led her to believe that she did not need to act until two years after Georges death. The court stated, The evidence showed that no one asked or induced Mabel to refrain from asserting any rights she may have possessed. The court also rejected Mabels contentions that Walbridge was estopped to assert the statutes of limitations because of alleged breaches of fiduciary duty by Walbridge, George and Lindquist, concluding that no one violated any duty to Mabel such that she could assert estoppel as a defense to having her claims barred by the statutes of limitations. Her claims, even if they had been proved, were time-barred.

An interlocutory judgment for the sale of real property and judgment on the cross-complaint and the creditors claim action was entered in December 2005. Mabel appealed from the judgment.

DISCUSSION

A. Failure to Prove Agreement for a Life Estate

Mabels opening brief contains five Legal Arguments or headings challenging the sufficiency of the evidence supporting the trial courts finding that Mabel had not proved a valid agreement for a life estate in Burnside. These arguments are: (1) The 1984 Oral Agreement Giving Rise To A Constructive Trust Was An Agreement That Mabel Could Live In Burnside Forever Should George Predecease Her. (2) The Trial Court Ultimately Ignored the Evidence Which Constituted the Agreement. (3) Extraneous Evidence [was] Relied on By the Trial Court to Vitiate the Agreement for a Life Estate. (4) Mabels Proof of Oral Agreement Was Not Belied by Trust Documentation. (5) Evidentiary Presumptions in Favor of Mabel were Improperly Disregarded.

By Mabels challenges to the trial courts finding on the issue of the oral agreement, she seeks to have us reweigh the evidence and reassess the credibility of witnesses, which we cannot do. The statement of decision explains the trial courts evaluation and interpretation of the evidence. The evidence relied upon by the trial court is sufficient to support the finding that Mabel did not meet her burden of proving the existence of an oral agreement for a life estate.

Mabel faults the trial court for ignoring Georges August 1984 letter (exhibit 12), the joint tenancy deed, and the 1985 trusts, documents which she claims either prove or constitute the agreement for a life estate. But the court reasonably could have inferred that the August 1984 letter  stating that one of Georges goals was to provide Mabel security in living in Burnside if he predeceased her  was too ambiguous and did not establish an agreement for a life estate. Mabel herself admitted that they had no other agreement pertaining to Burnside other than the terms in their trusts. And other evidence established that the joint tenancy deed was a mistake and did not reflect the couples intentions with respect to their rights in Burnside, that the couple wanted separate and independent trusts, and that Mabel understood the trusts were revocable.

Mabel also claims that the trial court improperly considered the respective wealth of Mabel and George, and Mabels net worth at the time of trial, in determining whether there was an agreement for a life estate. But the statement of decision does not indicate any such consideration by the trial court. Also without merit is Mabels argument, made for the first time on appeal, that the trial court disregarded a statutory presumption of undue influence by George because Mabel suffered a detriment and George received a benefit when they changed title to Burnside from joint tenancy to tenants in common. Assuming the issue has been preserved, we conclude it is without merit because the evidence supports the trial courts finding that the joint tenancy deed was a mistake and did not reflect the couples intentions with respect to Burnside. Thus, Mabel suffered no detriment when title was changed from joint tenancy to a tenancy in common.

B. Constructive Trust, Equitable Lien, Breach of Fiduciary Duty

The propriety of granting equitable relief of imposition of a constructive trust rests within the sound discretion of the trial court. (GHK Associates v. Mayer Group, Inc. (1990) 224 Cal.App.3d 856, 877878.)

A constructive trust may be imposed when a party has acquired property to which he is not justly entitled, if it was obtained by actual fraud, mistake or the like, or by constructive fraud through the violation of some fiduciary or confidential relationship. [Citations.] Such a trust, imposed upon a partner, agent, or other fiduciary, arises by operation of law, and, accordingly, the statute of frauds is no bar. [Citations.] (Warren v. Merrill (2006) 143 Cal.App.4th 96, 113.)

Equitable estoppel principles are available to enforce qualifying oral agreements to make a will or devise. (Estate of Housley (1997) 56 Cal.App.4th 342, 351, 358.) [E]quitable estoppel may apply to avoid the statutes of fraud and to make an oral agreement enforceable if (a) the promisee detrimentally relied on the agreement and would suffer an unconscionable injury if the oral agreement were not enforced or (b)  the promisor would receive unjust enrichment if allowed to retain the benefit of the promisees performance without abiding by the promisors obligations under the oral agreement. (Id. at p. 359.) When a constructive trust is imposed on property which the promisor left to others in violation of an oral contract, the remedy is known as quasi-specific performance. (Id. at p. 357.)

Mabels brief contains six headings addressed to her claim that she was entitled to a life estate in Burnside, or the imposition of an equitable lien for a life estate in the property, as an equitable remedy for Georges breach of fiduciary duty and fraud. She maintains that she detrimentally relied on the oral agreement and changed her position in reliance on it, and that Walbridge was thereby unjustly enriched. The headings of these sections in her opening brief are: (1) Mabel Changed Positions in Reliance on The Oral Agreement of a Life Estate In Burnside. (2) Application of Estoppel and Constructive Trust. (3) Fraudulent Scheme Taking an Agreement Outside of the Statute of Frauds (4) Mabels Reliance in Not Changing Her Trust. (5) Mabels Community Property Interest in Burnside. (6) Breaches of Fiduciary Duty and Need for Separate Counsel.

Mabels arguments premised on a purported community property interest in Burnside are without merit because none of the pleadings in the appellate record raise the issue (see fn. 1, ante), she offered no evidence establishing a community property interest in Burnside, her oral trial motion to amend to conform to proof did not explain the basis for her assertion of a community property interest in Burnside, and the statement of decision does not address the issue of community property. Because Mabel did not object in the trial court to any deficiencies in the statement of decision, we may infer that the trial court found against Mabel and determined that Burnside was not community property, but separate property. (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 11331134 [party must state any objection to the statement of decision in order to avoid an implied finding on appeal in favor of the prevailing party].) And the trial courts implied finding is supported by substantial evidence in that the respective trusts characterized Mabels and Georges interests in Burnside as separate property and there was no evidence establishing that community property was expended on Burnside.

Mabel asserts that her contribution of $11,000 to the purchase of Burnside and her relinquishment of a joint tenancy interest in 1985 were each an independent change in her position which has allowed the unjust enrichment to occur. She also contends that she detrimentally relied on the oral agreement in forbearing from changing her own trust. But Mabel has not been deprived of her $11,000 interest and the evidence supports the finding that the joint tenancy deed was a mistake and not what the couple intended. And there was no evidence that Mabel wanted to change her trust but refrained from doing so because of any oral agreement. Finally, Mabel has not explained how any change in her trust would have avoided her having to move out of the property two years after Georges death. Accordingly, Mabel has not established that anyone was unjustly enriched or that she suffered a detrimental change in position because of the alleged oral agreement for a life estate. The trial court did not abuse its discretion when it determined that Mabel failed to prove that she would be entitled to any constructive trust under any theory.

As to the issue of breach of fiduciary duty by George, the trial court stated that there were no breaches of any duty that could possibly form the basis for any relief Mabel seeks here. As stated, we interpret this statement to be a finding that any breach of fiduciary duty did not cause Mabel harm or did not provide a basis for equitable relief under the circumstances. Substantial evidence supports the trial courts finding that Mabel suffered no harm from Georges failure to inform her of his trust changes and his failure to advise her to seek separate counsel. Under the terms of the parties revocable trusts, George had the right to amend or revoke his trust, and Mabel presented no evidence that Georges failure to inform her of his trust changes caused her any detriment or harm.

For all of the foregoing reasons, we conclude that the trial court did not abuse its discretion in finding that Mabel was not entitled to an equitable remedy imposing a life estate on Burnside. Because the trial court determined that Mabels claims were without merit, we need not address Walbridges statutes of limitations defenses.^[3]

C. Bifurcation of Action Against Lindquist

We review a courts bifurcation order for abuse of discretion. (Omaha Indemnity Co. v. Superior Court (1989) 209 Cal.App.3d 1266, 1271.)

Mabel argues that the court abused its discretion in bifurcating her action against Lindquist because Lindquists testimony was central to the evidence that was introduced at trial, and she was prejudiced by his absence. But Lindquist testified extensively at trial; indeed, he was the first witness called by Walbridge, and Mabels attorneys cross-examination of Lindquist took up about 50 pages in the trial transcript. As Mabel fails to explain how Lindquists status as a witness rather than a party prejudiced her case against Walbridge, she does not establish that the bifurcation constituted an abuse of discretion.

DISPOSITION

The judgment is affirmed. Respondent Walbridge Wright is entitled to costs on appeal.

NOT TO BE PUBLISHED.

MALLANO, Acting P. J.

We concur:

ROTHSCHILD, J.

JACKSON, J.^*

Publication courtesy of California pro bono lawyer directory.

Analysis and review provided by Chula Vista Property line attorney.

^[1]Mabels appellate briefs also fail to address a claim for elder abuse, which was apparently asserted in a proposed amended complaint in her creditors claim action. Although Mabel filed a motion for leave to file an amended complaint, the motion was not accompanied by a proposed amended complaint and the motion was taken off calendar and never pursued. The record does not contain the proposed amended complaint. The trial court stated in its statement of decision that no proof was offered on the claim for elder abuse.

^[2]Code of Civil Procedure section 366.2, subdivision (a) provides: If a person against whom an action may be brought on a liability of the person, whether arising in contract, tort, or otherwise, and whether accrued or not accrued, dies before the expiration of the applicable limitations period, and the cause of action survives, an action may be commenced within one year after the date of death, and the limitations period that would have been applicable does not apply.

^[3]Therefore, we need not address Mabels arguments in the portions of her opening brief with the following headings: (1) Erroneous Finding of a Resulting Trust. (2) Equitable Estoppel Precludes Defendant Trust From Enforcing Statutory Limitations against Mabel. (3) No Statutory Bar to Partition Action [Cross-complaint].

Mabel charges the trial court with confusing the concepts of constructive trust and resulting trust. But the court discussed the resulting trust concept in connection with the statute of limitations defense, an issue we need not reach because we affirm the judgment on other grounds.

^*Judge of the Los Angeles Superior Court assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.