Cortez v. Incledon

Filed 10/9/07 Cortez v. Incledon CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

APPEAL from a judgment of the Superior Court of Los Angeles County. Daniel J. Buckley, Judge. Affirmed.

Law Offices of Daniel J. Doonan, Inc., Daniel J. Doonan and Lynne Rasmussen for Plaintiff and Appellant.

Law Offices of J. Randall Faith and J. Randall Faith for Defendant and Respondent.

* * * * * *

Appellant Robert J. Cortez sued his stepdaughter, respondent Diana Lynn Incledon, seeking to quiet title to two residential properties acquired during appellants marriage to respondents mother, Louise Cortez (Decedent). On appeal, appellant contends: (1) the trial court erred by placing the burden of proof on him to establish that the quitclaim deed was the result of Decedents undue influence; (2) respondent failed to rebut the presumption of undue influence; and (3) the trial court erred in failing to make findings on his cause of action for financial elder abuse and his allegations of conspiracy. We disagree and affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND^[1]

Evidence Adduced at Trial

Direct Examination

The following evidence was elicited during appellants direct examination: Appellant and Decedent were married for 17 years until Decedents death on May 16, 2004, at which time appellant was 74 years old. Appellants first wife, with whom he had four children, was murdered after their separation. During the entire marriage between Decedent and appellant, Decedent worked as a revenue agent or investigative auditor for the Internal Revenue Service. Appellant retired two years after his marriage to Decedent as a railroad terminal agent. Appellant described Decedent as manipulative, dominating, and as someone who always got her way and controlled all the finances.

In 1993, appellant and Decedent purchased a home located at 17920 East Renwick, Azusa, California (the Renwick property) and took title in both their names as community property. The Renwick property was purchased specifically for the purpose of allowing respondent and her children to reside there, and was purchased with money from appellants retirement account and from his and Decedents savings. In 2000, appellant and Decedent purchased a home from Decedents mother located at 145 South Hacienda Avenue, Glendora, California (the Hacienda property). Title was taken in Decedents name only. When appellant questioned why his name was not on the title, Decedent told him that it was due to tax purposes and that the Hacienda property would still remain community property. Appellant withdrew all of the money from his retirement account to help pay for the Hacienda property, with the balance coming from the sale of a home he had owned with his first wife. Appellant and Decedent moved into the Hacienda property.

On Christmas Eve 2002, Decedent was diagnosed with a recurrence of lung cancer. Appellant took the news hard and drove Decedent to her subsequent chemotherapy sessions. Shortly after hearing the news, Decedent began repeatedly telling appellant that she wanted respondent to have the Hacienda property and that she did not want appellants children to have the property. According to appellant, it seemed like the subject came up every time they returned from one of Decedents chemotherapy sessions. When appellant would respond that he wanted the Hacienda property, Decedent would become upset and either retreat to another room in the house or leave the house altogether. On at least five occasions, Decedent presented appellant with a quitclaim deed pertaining to the Hacienda property and residential leases for both the Hacienda and Renwick properties that she wanted him to sign. Each time appellant refused to look at the documents. Appellant finally read the documents when Decedent was starting to really feel bad and he just couldnt watch her suffer anymore, and it was like the last thing she wanted. Appellant did not agree to all of the lease provisions, but no changes were made to the leases before he signed them.

On March 8, 2004, appellant signed both leases and also signed a quitclaim deed giving his interest in the Hacienda property to Decedent. Appellant testified that he signed the documents because [i]t was just getting to the point where I just couldnt watch her, my wife, suffer, and she was very adamant about that nobody but her daughter would have that house. At this time appellant was taking medication to help him sleep and he was losing his hair from stress.

On May 8, 2004, without appellants knowledge, Decedent quitclaimed her interest in the Hacienda property to respondent. The effect of the quitclaim deeds and leases was that respondent became the owner of the Hacienda property and rented it to appellant, and appellant owned the Renwick property and rented it to respondent. Both leases were set to expire in the year 2030. The lease for the Hacienda property provided that it would also terminate on appellants death, inability or refusal to reside at the premises, when respondent was no longer able to reside at the Renwick property or when the lease for the Renwick property was no longer in effect. The lease for the Renwick property also provided that it would terminate when respondent no longer wished to occupy the premises. Appellant was required to maintain and pay property insurance for both properties and could not live at the Hacienda property with more than one other person.

Cross-examination

The following evidence was elicited during appellants cross-examination: Appellant and Decedent consulted on financial decisions. Appellant previously testified in his deposition that he had multiple opportunities to read the leases before he signed them and Decedent made at least three changes to the lease provisions at his request. Appellant was aware at all times from March 2004 forward that respondent would become the owner of the Hacienda property, and he never told Decedent that he did not wish that to happen. Appellant previously testified in his deposition that he more or less signed the quitclaim deed voluntarily and that he just gave up with it. Appellant graduated from Arizona State University. In his job with the railroad he supervised up to 300 employees in the demurrage and shipping department. During 2003 through 2004, appellant was a trustee of his local Elks lodge and was in charge of the lodges finances and he also served at one point as the lodges Exalted Ruler.

Procedural Background

On July 14, 2004, less than two months after Decedents death, appellant filed a complaint against respondent and all other persons unknown claiming an adverse interest in the Hacienda and Renwick properties, alleging causes of action for quiet title, cancellation of instruments, breach of constructive trust, breach of resulting trust, declaratory relief and financial elder abuse. The complaint alleges that appellant signed the two leases and the quitclaim deed on the Hacienda property under duress and without consideration. During the one-day bench trial, the court granted appellants oral motion for leave to amend the complaint to conform to proof on the issue of whether appellant signed the quitclaim deed as the result of Decedents undue influence.

In addition to appellant, testimony was also heard from respondent, Decedents mother, Decedents coworker and a notary public. After both sides rested, the trial court announced its tentative ruling, stating that just because appellant makes a heart decision to do what his wife wants at the end of her life he was not acting under undue influence. Appellants counsel requested that the court prepare a statement of decision, but the trial court denied the request, apparently on the grounds that under Code of Civil Procedure section 632 a statement of decision may be made orally when the trial does not last more than one day. The parties waived oral argument. The court found in favor of respondent on the complaint, stating: [Appellant] had, I think, admirable intentions to do what his wife wanted to do. I do think his intentions were motivated, in a large part, if not exclusively, by her health condition and a desire to make the last weeks and months of her life to go better and smoother. But I dont think legally or factually that that constitutes the duress or other theories raised by [appellant] in the other various causes of action. The court then directed respondent to prepare a judgment and directed appellant to review the judgment and note any objections. The judgment, which was also signed by appellants counsel as approved to form, states that no statement of decision was requested. This appeal followed.

DISCUSSION

Undue Influence

Appellant contends that the trial court committed reversible error by misallocating the burden of proof on the issue of undue influence, and further contends that, in any event, the courts finding that Decedent did not exert undue influence is not supported by substantial evidence. As discussed below, although we agree with appellant that a presumption of undue influence was applicable here which shifted the burden of proof to respondent, we disagree that the trial court misallocated the burden of proof on the issue of undue influence. We also conclude that respondent met her burden of rebutting the presumption of undue influence.

A. Burden of Proof

Appellant argues that under Family Code section 721 a presumption of undue influence arose when he quitclaimed his community property interest in the Hacienda property to Decedent without any consideration, thereby shifting the burden of proof on the issue of undue influence to respondent as the party seeking to uphold the transaction.^[2]

Family Code section 721 specifies that spouses occupy a confidential relationship with each other that is subject to the general rules governing fiduciary relationships: This confidential relationship imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other. This confidential relationship is a fiduciary relationship subject to the same rights and duties of nonmarital business partners . . . . (Fam. Code, 721, subd. (b).) Accordingly, if one spouse secures an advantage from an interspousal transaction, a statutory presumption arises under Family Code section 721 that the advantaged spouse exercised undue influence. (In re Marriage of Mathews (2005) 133 Cal.App.4th 624, 628629.) Generally, a spouse obtains an advantage if that spouses position is improved, he or she obtains a favorable opportunity, or otherwise gains, benefits, or profits. (Id. at p. 629.) The presumption of undue influence is regularly applied in marital transactions in which one spouse has deeded property to the other, . . . In such cases, it is evident one spouse has obtained an advantagethe deeded propertyfrom the other. (In re Marriage of Burkle (2006) 139 Cal.App.4th 712, 730.)

Appellant argues [t]here can be no doubt that [Decedent] gained an advantage over Appellant when he signed the quitclaim deed to her for the Hacienda property for no consideration, raising the presumption of undue influence. The trial court did not make any express finding on the issue of whether Decedent was advantaged by receiving appellants community property interest in the Hacienda property. The court did state that it could see a number of reasons why [appellant] would agree to transfer the community property. One, it sort of does lead to a division of property. It may not be equal in amount, but I dont have the evidence on that. The court was apparently referring to appellants testimony that he signed the quitclaim deed after Decedent threatened to sell all their properties and split them down the middle. But, as the court noted, there was no further evidence on that issue. Because Decedent received an advantage or benefit from appellants execution of the quitclaim deed in that the Hacienda property then became her separate property, the statutory presumption of undue influence arose. (In re Marriage of Mathews, supra, 133 Cal.App.4th at p. 629.)

We nevertheless disagree with appellant that the trial court failed to properly allocate the burden of proof on the issue of undue influence. Appellant claims that the trial courts following comments to his counsel demonstrate that the court improperly placed the burden on him to prove Decedents undue influence: But isnt there inherent in this you have to prove the intent of the bad person? In other words, youve got to prove that she took advantage of him, not that he felt sorry for her. If these were the courts only comments on the matter, we would be inclined to agree with appellant. But the court later addressed appellants counsel by stating: If I go with you on the burden of proof, which I think I will, I see that they have met their burden to show that there was not undue influence. These comments make clear to us that the trial court properly placed the burden of proof on respondent to rebut the presumption of undue influence. Accordingly, we find no merit to appellants argument that the judgment should be reversed on the asserted ground that the burden of proof on the issue of undue influence was misallocated.

B. Substantial Evidence

Appellant contends that there was no substantial evidence to support the trial courts finding that appellant was not unduly influenced by Decedent.

The parties are correct that the appropriate standard of review on the issue of whether respondent met her burden of rebutting the presumption of undue influence is the substantial evidence test. (In re Marriage of Mathews, supra, 133 Cal.App.4th at p. 632 [whether the spouse gaining an advantage has overcome the presumption of undue influence is a question for the trier of fact, whose decision will not be reversed on appeal if supported by substantial evidence].) Under the substantial evidence test, [t]he power of a reviewing court begins and ends with a determination of whether there is in the record substantial evidence, contradicted or uncontradicted, which supports the result reached; and we must also assume in favor of the determination below the existence of every fact which the trier of facts could have reasonably deduced from the evidence. [Citation.] (In re Marriage of Balcof (2006) 141 Cal.App.4th 1509, 1521.)

As the party seeking to rebut the presumption of undue influence, the burden was on respondent to establish by a preponderance of the evidence that the quitclaim deed was freely and voluntarily made, with a full knowledge of all the facts and with a complete understanding of the transfer. (In re Marriage of Mathews, supra, 133 Cal.App.4th at p. 631; In re Marriage of Haines (1995) 33 Cal.App.4th 277, 296.) Substantial evidence in the record supports the conclusion that respondent satisfied her burden of proof and rebutted the presumption of undue influence.

Appellant testified that he knew the effect of his signing the quitclaim deed was that he was giving up his rights to the Hacienda property and he testified more than once that he knew respondent would become the owner of the property. It is of no import that appellant later contradicted his own testimony on his redirect examination by testifying that when he signed the quitclaim deed he did not intend to empower Decedent to then give the Hacienda property to respondent. Substantial evidence can be both contradicted or uncontradicted. (In re Marriage of Balcof, supra, 141 Cal.App.4th at p. 1521.) Thus, the evidence supports the implicit conclusion that appellant signed the quitclaim deed with a full knowledge of all the facts and with a complete understanding of the transfer.

Respondents most difficult burden in overcoming the presumption of undue influence was showing that appellant signed the quitclaim deed freely and voluntarily. Appellant argues that [t]he instant case is a classic example of one who is emotionally susceptible to undue influence and points out that he had to witness his wife suffer from a debilitating, terminal illness and become upset every time he resisted her request to sign the quitclaim deed, that he was under a great deal of stress and that he had already lost one wife. We are not unsympathetic to the difficult situation in which appellant found himself. But we find that the evidence shows that appellant acted freely and voluntarily. In his prior deposition testimony, which was read into the record, appellant testified that he more or less signed the quitclaim deed voluntarily. Appellant had multiple discussions over the course of some time with Decedent on the topic of appellant signing the quitclaim deed and respondent becoming the owner of the Hacienda property, and he had multiple opportunities to object. Appellant could have continued to object, but testified that he did not want to see his dying wife suffer any more than she already was suffering. We cannot conclude on the record before us that because appellant agreed to Decedents wish in order to make her happy his actions were not freely and voluntarily made.

Appellant argues that the facts in this case are strikingly similar to those in Stewart v. Marvin (1956) 139 Cal.App.2d 769. We disagree. There, a husband became the sole owner of the couples home pursuant to a divorce settlement. After he and his wife reconciled, the wife nagged him to add her as a joint tenant on the deed to their home. (Id. at p. 771.) At the time, the husband was 79 years old and somewhat senile; the wife was 20 years younger. (Ibid.) The husband testified that he agreed to sign the joint tenancy deed because he loved and trusted his wife and wanted to make her happy and because of her persistent nagging and threats to leave him again. (Ibid.) While the husband denied at trial that there was anything wrong with his mind both at the time of trial and when he signed the deed, it was obvious to the trial court and to the appellate court based on the record that the husband was affected to a substantial extent by senility and was not in complete control of his mental faculties. (Id. at p. 773.) The trial courts conclusion that the deed was procured by the wifes undue influence was affirmed. The court of appeal found that the evidence when considered in conjunction with the evidence of [the husbands] mental condition, justified the courts finding that this joint tenancy deed was a product of coercion, and that [the wife] took unfair advantage of such weakness of mind and of his distress by coercing him into signing the joint tenancy deed involved. (Id. at p. 776.)

By contrast, here there was no suggestion that appellant was not in full control of his mental faculties. The trial court commented that appellants direct examination suggested that appellant worked in a manual labor position and that he never did anything using his mind. But on cross-examination it became clear to the court that appellant was a bright man; he knows money; he knows what hes doing. The trial court had the opportunity to observe appellants demeanor on the stand and to hear first-hand his testimony. Based upon that testimony and the other evidence before it, the trial court simply did not believe that just because appellant makes a heart decision to do what his wife wants at the end of her life, that he did so because of undue influence. On the record before us, we agree. As the court noted in Odorizzi v. Bloomfield School Dist. (1966) 246 Cal.App.2d 123, 132: There are second thoughts to every bargain, and hindsight is still better than foresight. Undue influence cannot be used as a pretext to avoid bad bargains or escape from bargains which refuse to come up to expectations. . . . If we are temporarily persuaded against our better judgment to do something about which we later have second thoughts, we must abide the consequences of the risks inherent in managing our own affairs.

Financial Elder Abuse and Conspiracy

Appellant complains that the trial court failed to make findings on his cause of action for financial elder abuse and his allegations of conspiracy. He contends that such failure constitutes reversible error. We find no merit in appellants contention.

First, appellant points to the judgment, asserting that it is silent on these two issues. But the written judgment does not contain findings on any cause of action, theory or issue. The judgment simply states that judgment is awarded in favor of respondent. It is well established that a judgment or order appealed from is presumed correct and that all intendments and presumptions are indulged to support it on matters as to which the record is silent. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.) The trial court previously stated that it was find[ing] in favor of [respondent] on the complaint before me, which would necessarily include all of appellants causes of action and allegations pled. Moreover, after the trial court directed appellant to notify the court of any objections appellant had to the form of the judgment as prepared by respondent, appellants counsel specifically signed the judgment as being approved as to form. When a party by his conduct induces the commission of an error, he is estopped from asserting it as a ground for reversal. (Kardly v. State Farm Mut. Auto. Ins. Co. (1995) 31 Cal.App.4th 1746, 1750.)

Second, appellant did not try his case on the theory that respondent, as opposed to Decedent, took advantage of him. In neither his opening statement nor his counsels discussions with the court following submission of the case did appellant inform the court that he was trying the case on theories of elder abuse or conspiracy. Indeed, the court specifically asked appellants counsel the following question: [Y]ou believe that not [respondent] but the [D]ecedent Louise Cortez took advantage of [appellant] as to the original quitclaim as to the Hacienda property and then each individual lease? Appellants counsel responded: In essence, yes, your honor. The rule is well settled that the theory upon which a case is tried must be adhered to on appeal. A party is not permitted to change his position and adopt a new and different theory on appeal. To permit him to do so would not only be unfair to the trial court, but manifestly unjust to the opposing litigant. [Citations.] And this rule is to be stringently applied when the new theory depends on controverted factual questions whose relevance thereto was not made to appear at trial. [Citation.] (Koehl v. Verio, Inc. (2006) 142 Cal.App.4th 1313, 1339.) The rule is founded on both waiver and estoppel considerations. (See 9 Witkin, Cal. Procedure (4th ed. 1997) Appeal, 400, p. 453.) Appellant argues that respondent had every opportunity to present her best evidence on the issues of elder abuse and conspiracy and that she failed to do so. Respondent was only required to defend the case as it was presented by appellant. But if the new theory contemplates a factual situation the consequences of which are open to controversy and were not put in issue or presented at the trial the opposing party should not be required to defend against it on appeal. [Citations.] (Strasberg v. Odyssey Group, Inc. (1996) 51 Cal.App.4th 906, 920.)

DISPOSITION

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

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

_____________________, J.

DOI TODD

We concur:

____________________________, P. J.

BOREN

____________________________, J.

CHAVEZ

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^[1] Appellants appendix (which is the only appendix in this appeal) contains exhibits identified at trial but never moved into evidence. The trial court requested that all exhibits be moved into evidence at the end of trial, but counsel apparently inadvertently failed to do so. Respondent refers to the exhibits in her brief on appeal without waiving her objection that the exhibits cannot be considered as evidence in this case. Because the record does not disclose any objection to the exhibits below and because both parties have relied on the exhibits on appeal, we will likewise rely on the exhibits in this appeal.

^[2] Appellant acknowledges that title to the Hacienda property was taken in Decedents name alone, but asserts [t]here is no serious dispute that Hacienda was community property. Appellant cites to Family Code section 760, which provides: Except as otherwise provided by statute, all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state is community property. As appellant notes, [t]he question is whether [Decedent] gained [a]ppellants share of Hacienda through undue influence . . . .