Opinion
D070279
06-29-2017
Estate of TERRENCE L. FLEMING, Deceased. LOIS ZVOLENSKY et al., Petitioners and Appellants, v. KENNIETHA M. McGUFFIN, Objector and Respondent.
Preovolos Lewin & Hezlep, Thanasi K. Preovolos, Carl L. Jones and Sandy S. Isaac for Petitioners and Appellants. Beamer, Lauth, Steinley & Bond, Stephen A. Bond and Phillip A. Bond for Objector and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2013-00038966-PR-LA-CTL) APPEAL from an order of the Superior Court of San Diego County, Julia C. Kelety, Judge. Affirmed. Preovolos Lewin & Hezlep, Thanasi K. Preovolos, Carl L. Jones and Sandy S. Isaac for Petitioners and Appellants. Beamer, Lauth, Steinley & Bond, Stephen A. Bond and Phillip A. Bond for Objector and Respondent.
More than one year after her brother, Terrence L. Fleming, died—Lois Zvolensky (Lois) petitioned the probate court to have title to real estate that was held in Fleming's name transferred to her under a real estate purchase contract. The court denied the petition on the ground it was time-barred under Code of Civil Procedure section 366.2.
All undesignated statutory references are to the Code of Civil Procedure.
Lois and her husband, Michael Zvolensky (collectively Petitioners), appeal, contending the one-year statute of limitations in section 366.2 does not apply because (1) a resulting trust arose; (2) Fleming did not breach the contract during his life; and (3) Petitioners suffered no damages until after Fleming died. For the first time in the reply brief, Petitioners also assert it is "unclear" whether section 366.2 applies to their petition, brought under Probate Code section 850. We reject these contentions and affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Because Petitioners framed these proceedings as a motion for judgment on the pleadings, the facts are those Petitioners alleged in their petition and accompanying joint declaration, which the petition incorporated.
A. The Purchase Contract
In 1999 Fleming acquired title to a home on Galveston Street in San Diego (the Property). In 2006 Fleming held title to the Property as an unmarried man.
In 2009 Fleming was in the business of buying, renovating, and quickly reselling homes. Fleming is Lois's brother. In May 2010 Lois and her husband were interested in buying a house. They asked Fleming to "watch for a house that would fit" their needs.
In June 2010 Fleming suggested Petitioners buy the Property, which Fleming had been renting out for several years. Fleming had financial problems and needed about $40,000 to avoid foreclosure.
In July 2010 Fleming and Petitioners entered into a written contract to purchase the Property. The price was $631,700, payable with cash as an earnest deposit and at closing, and seller financing.
Subsequently, Fleming and Petitioners orally modified the contract in two significant ways. First, to restore his credit rating, Fleming asked Petitioners to allow him to remain on the title for a period of time and to pay the monthly mortgage to him, which he would use to pay the lenders. Also, instead of seller financing, Petitioners agreed to assume the two existing loans on the Property.
Chase Bank (Chase) held one of those loans. At the time, Fleming had a loan modification application pending at Chase and transferring title "could have jeopardized the modification." Petitioners agreed that Fleming would not convey title until "after the Chase loan modification process was complete." However, "[o]nce the loan modification was completed, [Petitioners] understood [Fleming] would transfer the title into [their] names." Petitioners began paying the mortgage in July 2010 and moved into the Property in October 2010.
B. Chase Loan Modification, Fleming's Illness
On August 7, 2011, Fleming told Petitioners he was in poor health. About a week later, on August 15, 2011, Fleming informed them Chase approved the loan modification and he would add Petitioners to the title "next month."
However, in September 2011 Fleming's health worsened. In October 2011 Lois asked Fleming if he had had the opportunity to transfer title, but Fleming said "he had not been able to do so due to health complications."
In November 2011 Petitioners discussed between themselves "approaching [Fleming] again about finalizing the transfer and adding us to [the] title." However, they decided not to ask him to transfer title "due to [Fleming's] unknown diagnosis at that time and progressively worse health." They "chose to wait until after the holidays and ask again in the [n]ew [y]ear."
Throughout December 2011 Fleming's health worsened; he was mostly bedridden. In April 2012 he was diagnosed with cancer.
In August 2012 Fleming suffered several strokes and was frequently hospitalized. He died intestate on November 10, 2012, still holding title to the Property.
Petitioners acknowledge that Fleming's "promise to transfer title . . . was not completed" and further explain: "Although the transfer of title to the real property should have occurred during [Fleming's] life, circumstances dictated a different course that resulted in [Fleming] passing with title in his name. . . . When [Petitioners] learned of [Fleming's] terminal cancer their focus was to help their brother/brother-in-law find a treatment plan and also to make his final months as smooth as possible. Pushing the idea of having [Fleming] sign the transfer of title seemed heartless and [Petitioners] simply could not push the issue at that time."
C. The Petition
"[Probate Code section] 850 et seq. governs probate litigation over adverse claims to property." (Ross & Cohen, Cal. Practice Guide: Probate (The Rutter Group 2016) ¶ 15:556, p. 15-154, italics omitted.) In a decedent's estate administration, Probate Code section 850 proceedings may be commenced where "the decedent died in possession of, or holding title to, real or personal property, and the property or some interest therein is claimed to belong to another." (Prob. Code, § 850, subd. (a)(2)(C).)
More than one year after Fleming died—on December 16, 2013—Lois filed a Probate Code section 850 petition to direct transfer of the Property to her. On January 29, 2015, Petitioners filed an amended petition (Petition) seeking title to the Property, together with a jointly executed declaration.
An intestate heir, Kennietha McGuffin, opposed the Petition, asserting it was time-barred under section 366.2. McGuffin asked the court to resolve the statute of limitations issue "like in a motion for judgment on the pleadings" by assuming the facts alleged in the Petition and declaration were true.
On appeal, McGuffin inconsistently and incorrectly states the court conducted a trial and its findings should be reviewed for substantial evidence.
D. The Probate Court's Ruling
The court determined that the Petition was time-barred, and stated:
"I think it is unfortunate and sad that [Petitioners] didn't consult with counsel about these important legal rights at some appropriate time. And of course, you know, we certainly see these sad cases where people are do-it-yourself lawyers. And it's unfortunate when it doesn't work out well. There's a reason people go to law school,
because it's not easy to wing it. And I see constantly with people doing their own estate plans, for example. It comes out badly very often.
"So it's not an issue of whether [Petitioners] meant well. I'm sure they did mean well. The statute of limitations is quite unforgiving. And that, at least in this area, is because of extremely important public policy. We're all about in this court finalizing the affairs of decedents. And it's pretty difficult to finalize the affairs of the decedent in a reasonable time if you don't have a strict statute of limitations, and section 366.2 is such a statute."
DISCUSSION
I. THE PETITION IS TIME-BARRED
A. The Standard of Review
We review de novo an order granting a motion for judgment on the pleadings. (Bezirdjian v. O'Reilly (2010) 183 Cal.App.4th 316, 321.) On appeal from a judgment on the pleadings, we assume the truth of all properly pleaded factual allegations. (Ibid.)
B. Section 366.2
Section 366.2 provides: "(a) 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."
Section 366.2 is "'a general statute of limitations for all claims against a decedent.'" (Dacey v. Taraday (2011) 196 Cal.App.4th 962, 980 (Dacey).) The "'overall intent'" of the Legislature in enacting section 366.2 is "'to protect decedents' estates from creditors' stale claims.'" (Stoltenberg v. Newman (2009) 179 Cal.App.4th 287, 292 (Stoltenberg).) Code of Civil Procedure section 366.2 applies in a proceeding under Probate Code section 850 that is based "on the liability of a person who dies before the expiration of the applicable limitations period." (2 Cal. Trust and Probate Litigation (Cont.Ed.Bar 2017) Resolving Disputed Property Claims, § 19.5, p. 19-7.)
Because it is undisputed that Lois filed her original petition in December 2013—more than one year after Fleming died—the Petition is time-barred if section 366.2 applies.
C. No Resulting Trust
Where one person acquires title to property using someone else's money, a resulting trust arises by operation of law. (Viner v. Untrecht (1945) 26 Cal.2d 261, 269.) A resulting trust arises because it is the natural presumption in such a case that the parties intended the ostensible purchaser to acquire the property for the one who paid for it. (Berniker v. Berniker (1947) 30 Cal.2d 439, 447 (Berniker).) "The law implies an obligation on the part of the one in whom title has vested to hold the property for the owner's benefit and eventually convey it to the owner." (Estate of Yool (2007) 151 Cal.App.4th 867, 874 (Yool).)
Section 366.2 only applies to "a liability of the person." (§ 366.2, subd. (a).) In Yool, supra, 151 Cal.App.4th 867, the court held section 366.2 does not apply to an action seeking to impose a resulting trust because a resulting trust "does not implicate the personal liability of the purported trustee. Rather, the trustee's sole purpose is to hold or convey the property according to the beneficiary's demands." (Yool, at pp. 875-876.)
Here, Petitioners contend a resulting trust arose because although Fleming held legal title to the Property since at least 2006, Petitioners paid the mortgage from 2010 to the present day. As explained post, this argument fails because Fleming and Petitioners did not acquire the Property together; rather, Fleming already held title when Petitioners starting paying the mortgage.
A resulting trust arises, if at all, when legal title is acquired by the person against whom the claimant is asserting the right to title. For example, in Yool, supra, 151 Cal.App.4th 867, the decedent and her daughter acquired real property together. The decedent, who paid no consideration for the property, was on the title to facilitate financing for her daughter. (Id. at p. 871.) Yool is a textbook case for imposing a resulting trust because a transfer of property was made to one person (mother), and the consideration was paid by another (daughter).
Similarly, in Stone v. Lobsien (1952) 112 Cal.App.2d 750, the plaintiffs wanted to buy a home. They made the down payment and agreed to make monthly payments; however, because they were on public assistance, title was taken in the defendant's name. (Id. at p. 753.) A resulting trust arose the because "the transaction is simply the case of one person paying the consideration and another taking title, the most elementary and simplest type of a resulting trust." (Id. at p. 756.)
The same principle is illustrated by In re Marriage of Ruelas (2007) 154 Cal.App.4th 339. There, Michelle Hernandez took title to a condominium; however, her parents funded the mortgage payments. (Id. at p. 341.) The court found a resulting trust arose in favor of the parents. (Id. at p. 345.)
These cases illustrate the principle that for a resulting trust to arise, the consideration given by the claimant (either money or an enforceable promise to pay) must be made when the alleged trustee acquires legal title to the property. The party claiming the benefit of the trust must show that either the money was paid, or an agreement to pay for the property was made, "as part of the original transaction of purchase." (Elliott v. Wood (1949) 95 Cal.App.2d 314, 318.)
Thus, to determine if a resulting trust arose in this case, we look to the facts existing when Fleming acquired legal title as grantee. "[A] resulting trust cannot be imposed when the agreement is made after the grantee receives the title and the claimant has made payments on account of the purchase price or for improvements after the grantee has received title." (12 Miller & Starr, Cal. Real Estate (4th ed. 2016) Judicial Remedies, § 40:122, p. 40-440.)
Here, the probate court correctly determined a resulting trust did not arise. Petitioners' agreement to pay the mortgage, and payments they actually made, do not create a resulting trust because such occurred after—in fact, many years after—Fleming acquired legal title to the Property.
Citing Mulli v. Mulli (1951) 105 Cal.App.2d 68 (Mulli)), Petitioners contend the facts there are "nearly identical" to the instant case, and "[a]ll factors relied upon by the Mulli court to find a resulting trust are satisfied" here. However, Mulli is off point for two reasons. First, the facts are not "nearly identical." Mulli concerns the enforceability of an oral express trust, not a resulting trust. Second, there was no statute of limitations issue in Mulli.
In Mulli, supra, 105 Cal.App.2d 68, the defendant agreed "to hold" certain real property "for the benefit" of the plaintiff. (Id. at pp. 70-71.) The court held this created an enforceable "express oral trust," notwithstanding the statute of frauds, because the beneficiary possessed the land and made improvements. (Id. at p. 73.) There was no statute of limitations issue in Mulli because the breach occurred in December 1947 and the action was filed in June 1948. (Id. at p. 75.) Mulli is inapposite because the Petition does not allege facts establishing an express trust. The Petition alleges a contract for sale, not an express trust, and Petitioners seek the remedy of a resulting trust. Mulli is simply not a resulting trust case.
In the midst of their argument about a resulting trust, Petitioners' brief contains a single sentence asserting an express trust arose because Fleming's only remaining contractual duty was to transfer title. However, the brief does not develop this argument with any record citations, any citation to legal authority, nor is there any analysis of how the facts alleged in the Petition establish an express trust. Accordingly, the argument is forfeited. (Allen v. City of Sacramento (2015) 234 Cal.App.4th 41, 64.)
Citing Berniker, supra, 30 Cal.2d at page 448, Petitioners assert the probate court here erred because "a statute of limitations never runs in favor of a trustee as against the beneficiary while the latter is in possession of the property." (Bolding & underscoring omitted.) However, because the facts alleged in the Petition do not establish a resulting trust, Berniker is inapposite.
In the reply brief, Petitioners contend Fulton v. Jansen (1893) 99 Cal. 587 (Fulton) supports imposing a resulting trust. There, Fulton paid $200 down (and promised to pay $250 later) for a portion of land owned by Jason Brown. (Id. at p. 589.) Brown then conveyed a larger tract of land, including the part he had sold to Fulton, to a third party, Jansen. (Ibid.) Jansen agreed to perform Brown's contract to convey the smaller parcel to Fulton, and Jansen deducted from his purchase price the $200 already paid by Fulton to Brown. (Id. at pp. 589, 592.) When Fulton tendered the remaining purchase price to Jansen and demanded a deed, Jansen refused to convey title. The California Supreme Court imposed a resulting trust in favor of Fulton against Jansen because when Jansen acquired legal title to the entire parcel, Fulton "in effect paid two hundred dollars of the purchase price" and thereby was "in the position of one who advance[s] a portion of the purchase-money." (Id. at p. 592.)
Contrary to Petitioners' argument, Fulton, supra, 99 Cal. 587 is another example of the rule that a resulting trust arises, if at all, upon the acquisition of legal title by the person claimed to be holding as a trustee. Indeed, the Court in Fulton states, "In order to raise such resulting trust, by payment of the purchase-money, it is essential that the payment be actually made by the beneficiary, or that an absolute obligation to pay should be incurred by him, 'as a part of the original transaction of purchase, at or before the time of the conveyance; no subsequent and entirely independent contract, intervention, or payment on his part would raise any resulting trust.'" (Id. at p. 591.) Fulton further supports the probate court's ruling that no resulting trust arose here because Petitioners did not pay or promise to pay for the Property as part of Fleming's original acquisition of title.
Violating California Rules of Court, rule 8.1115, Petitioners cite an unpublished California decision, Estate of Avila (Aug. 13, 2012) H036765 [nonpub. opn.] as support for their resulting trust argument. Petitioners justify citing this unpublished case by asserting Avila is relevant "under the doctrine of law of the case" because Avila involves a resulting trust, which is law involved in the instant case. This reflects a basic misunderstanding of the law-of-the-case doctrine. (See Morohoshi v. Pacific Home (2004) 34 Cal.4th 482, 491 [explaining law-of-the-case doctrine].) We disregard the improper citation.
D. Fleming Breached in August 2011
Section 366.2 only applies to a cause of action that could have been brought against the decedent prior to his or her death. (Yool, supra, 151 Cal.App.4th at p. 876.) The breach or misconduct must have occurred prior to the decedent's death, although the claim does not have to be discovered while the decedent is alive. (Dacey, supra, 196 Cal.App.4th at p. 983.)
Petitioners assert the parties modified the contract to give Fleming an "undetermined amount of time to transfer title after [Fleming] informed [Petitioners] of his cancer." Petitioners contend that as so modified, the contract allowed Fleming to convey title "when he was physically able to do so." Asserting Fleming was physically unable to convey title upon becoming ill in August 2011, Petitioners contend Fleming did not breach the contract during his life, and therefore section 366.2 is inapplicable.
This argument fails because it is not supported by the Petition or the accompanying declaration. The Petition and declaration establish the parties agreed Fleming would convey title when Chase approved the loan modification. For example, the Petition alleges "title transfer would be finalized after the Chase loan modification process was complete." Similarly, in the accompanying declaration, Petitioners state, "Once the loan modification was completed we understood [Fleming] would transfer title into our names."
Moreover, Petitioners' declaration states that in approximately October 2011, Lois asked Fleming "if he had the chance to add us to the property title." In the declaration, Petitioners state in November 2011 they discussed "approaching [Fleming] again about finalizing the transfer and adding us to [the] title." However, they decided not to ask Fleming for title then, and instead "wait until after the holidays and ask again in the [n]ew [y]ear." In the declaration, Petitioners acknowledge "the promise to transfer title on the [Property] to Lois and [Michael] as agreed and confirmed herein, was not completed." (Italics added.)
Also inconsistent with their theory of a contract modification, Petitioners submitted a declaration from Fleming's brother stating, "Due to a mistake or clerical error, or inadvertent oversight, the deed to the real property was not executed granting the property to Lois at the time of sale."
Motivated by compassion for Fleming, Petitioners did not demand he convey title even after Chase approved the loan modification. In their declaration, Petitioners state, "During the final year when [Fleming's] health became terminal it hardly seemed appropriate to push for him to execute the deed." Similarly, the Petition asserts, "When [Petitioners] learned of [Fleming's] terminal cancer their focus was to help their brother/brother-in-law find a treatment plan and also make his final months as smooth as possible. Pushing the idea of having [Fleming] sign the transfer of title seemed heartless and they simply could not push the issue at that time."
The Petition and accompanying declaration show forbearance from asserting an existing contractual right to title, a right that ripened in August 2011 when Chase completed the loan modification. Such forbearance is not equivalent to, and does not create, a modification of the contract to indefinitely delay transfer of title.
Petitioners assert that "[b]eing reasonable and decent people, [they] never made a formal demand upon their dying brother." We sympathize with the position Petitioners were in, and we respect their selflessness and compassion during Fleming's illness. However, under section 366.2, Petitioners had a full year after Fleming died in which to assert their contract rights. (§ 366.2, subd. (a).) Petitioners' claim is time-barred—not because the law is acting harshly in response to their reasonable and compassionate forbearance while Fleming was alive—but because for more than a year later, after Fleming died, they failed to commence proceedings to enforce their contract rights. (See Stoltenberg, supra, 179 Cal.App.4th at p. 292 [the one-year limitation period in section 366.2 serves "'"the strong public policies of expeditious estate administration and security of title."'"].)
In a related argument, citing Romano v. Rockwell Internat., Inc. (1996) 14 Cal.4th 479, 489 (Romano), Petitioners contend where there are "ongoing contractual obligations" the plaintiff may elect to "rely on the contract" and not assert breach until a later time. Asserting "the cause of action would have been waived" during Fleming's illness, Petitioners contend no cause of action accrued before Fleming died.
This argument is also untenable. Romano, supra, 14 Cal.4th 479 addressed whether an employee's claim for wrongful termination against his employer accrued on the date of his termination, or instead on the date the employee was notified his employment was going to be terminated. The employee-plaintiff was notified that he would be terminated, but waited until after he was actually forced to retire to file suit. (Id. at pp. 484-485.) The employer-defendant argued the employee's claim was time-barred, basing the accrual date on the date the employee received initial notice that he would be terminated. (Id. at pp. 485-486.) The California Supreme Court rejected the employer's argument "because [the employee] continued to perform and accept compensation until the time of [his] actual termination." (Id. at p. 490.) The court explained that "when there are ongoing contractual obligations the plaintiff may elect to rely on the contract despite a breach, and the statute of limitations does not begin to run until the plaintiff has elected to treat the breach as terminating the contract." (Id. at p. 489, italics added).
Unlike the facts in Romano, supra, 14 Cal.4th 479, here there were no ongoing contractual obligations after August 2011. In fact, elsewhere in their opening brief, Petitioners admit this, stating, "The only remaining task was for [Fleming] to physically transfer title." Once Fleming breached the contract by not conveying title in August 2011 after the Chase loan modification, there were no ongoing contractual obligations that could forestall accrual of the cause of action for breach of contract. (See generally 3 Witkin, Cal. Procedure (5th ed. 2008) Actions, § 520, p. 664 ["A cause of action for breach of contract ordinarily accrues at the time of breach."].)
E. Damage
Petitioners assert they had no cause of action against Fleming before he died because, despite not having title, they were in exclusive possession of the Property, and therefore sustained no damages. This argument lacks merit. Petitioners were damaged because they do not have legal title to the Property. As the probate court aptly commented in rejecting this argument, "The damages are that [the Property] belongs to the estate. That they're going to lose whatever rights they have under the contract. Those are substantial damages; otherwise, we wouldn't be here, would we?"
F. Forfeiture
For the first time in the reply brief, Petitioners assert "it is unclear if [Code of Civil Procedure section] 366.2 applies to Probate Code [section] 850 at all." We decline to consider this argument. Considerations of fairness in argument demand the appellant present all of his or her points in the opening brief. To withhold a point until the closing brief deprives the respondent of the opportunity to respond. "'"'Therefore, points raised in the reply brief for the first time will not be considered, unless good reason is shown for failure to present them before.'"'" (Proctor v. Vishay Intertechnology, Inc. (2013) 213 Cal.App.4th 1258, 1273.) Petitioners make no showing of good cause to consider this issue for the first time in the reply brief. Accordingly, this issue is forfeited.
DISPOSITION
The order is affirmed. McGuffin is entitled to costs incurred on appeal.
NARES, J. WE CONCUR: McCONNELL, P. J. DATO, J.