Opinion
D071903
05-30-2018
Estate of ALMUTH ALINE SOLOMON-HAYES, Deceased. THOMAS L. BEHR, as Personal Representative, etc. Petitioner and Respondent, v. THERESA HAWKINS, as Administrator, etc., Objector and Appellant; JOHN HAASE et al., Claimants and Respondents; ANDREA J. HAYES et al., Objectors and Respondents.
Preovolos Lewin & Hezlep, Thanasi K. Preovolos, and Carl Jones, for Objector and Appellant. Kimball, Tirey & St. John, Niddrie Addams Fuller, Charles T. Scott, and Victoria E. Fuller, for Petitioner and Respondent. No appearance for Claimants and Respondents. No appearance for Objectors and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. 37-2008-00151449-PR-PW-CTL) APPEAL from an order of the Superior Court of San Diego County, Robert C. Longstreth, Judge. Affirmed. Preovolos Lewin & Hezlep, Thanasi K. Preovolos, and Carl Jones, for Objector and Appellant. Kimball, Tirey & St. John, Niddrie Addams Fuller, Charles T. Scott, and Victoria E. Fuller, for Petitioner and Respondent. No appearance for Claimants and Respondents. No appearance for Objectors and Respondents.
Theresa Hawkins, administrator of the Estate of Edgar J. Hayes, Jr. (Edgar's estate), appeals from an order approving final settlement of the Estate of Almuth Aline Solomon-Hayes (Almuth's estate). Hawkins contends the proceeds from the settlement belong to Edgar's estate, rather than to Edgar's adult children, and the settlement should be cancelled, or, alternatively, reformed to effect transfer of the settlement proceeds to Edgar's estate for administration. We conclude the trial court properly exercised its discretion when it approved the settlement, ending years of litigation between the two estates and their heirs. We affirm the order.
FACTUAL AND PROCEDURAL BACKGROUND
Edgar J. Hayes, Jr. (Edgar) and Almuth Aline Solomon-Hayes (Almuth) were married in 1976. Edgar died intestate in February 2008, survived by his five adult children and Almuth. Almuth died testate only a few weeks later. Almuth's will, which left nothing to Edgar's children, directed that her estate's assets be paid into her family trust, the beneficiaries of which were her two brothers.
Separate probate proceedings were initiated for Edgar (San Diego County Superior Court case number 37-2008-00151376-PR-LA-CTL) and Almuth (the present case). Donna, Edgar's eldest child, was appointed as the first administrator of Edgar's estate. When Donna was subsequently removed as administrator, appellant Hawkins was appointed as her successor. Marlin Corbitt served as the executor of Almuth's estate from the time of her death until his death in 2014. Thomas Behr, respondent in this appeal, is the current representative of Almuth's estate.
Over the years, Edgar's children, as self-represented litigants, pursued litigation against Edgar's estate. They sought to have Hawkins removed as administrator, petitioned for orders directing Hawkins to bring litigation on behalf of Edgar's estate, and objected to Hawkins's proposed sale of Edgar's assets to provide liquidity to his estate.
Edgar's children sought an order directing Hawkins, as the administrator of Edgar's estate, to file suit against Almuth's estate or to assert claims against Almuth's estate on the children's behalf. Hawkins objected to these requests. Ultimately, the court sided with Hawkins, ruling that requiring Hawkins to bring such claims would incur an "unnecessary administrative expense" to Edgar's estate—unnecessary "because the Hayes adult children, who are self-represented, can seek the same relief" without incurring the personal representative's fees and her attorney's fees.
Edgar's children also litigated extensively against Almuth's estate. They challenged the validity of Edgar and Almuth's marriage and argued that Edgar's assets, life insurance policies, and property had been improperly transferred from Edgar's estate to Almuth's estate.
Edgar's children sought and obtained discovery and participated in the trial of their claim challenging the validity of Edgar and Almuth's marriage. Hawkins was present at the trial. After trial, the court ruled that Edgar and Almuth were validly married or, alternatively, Almuth was Edgar's putative spouse. Edgar's children unsuccessfully moved for a new trial. Their subsequent appeal was dismissed as untimely. (See Estate of Solomon-Hayes (app. dism. Aug. 25, 2014, D066502).)
Meanwhile, Edgar's children continued to prevent the closure of Almuth's estate, seeking a stay of proceedings during the pendency of the first appeal and opposing the appointment of Almuth's sister-in-law as successor administrator of Almuth's estate upon the death of the original administrator.
Thomas Behr ultimately was appointed as a neutral successor administrator of Almuth's estate. At a subsequent hearing, Edgar's children indicated that they intended to continue litigating the validity of Edgar and Almuth's marriage under a new theory based on previously unknown facts. When Edgar's children expressed interest in settlement, the court ordered the parties to participate in a mandatory settlement conference.
Hawkins was informed of the mandatory settlement conference, but she did not attend because she felt her attendance was not necessary and her involvement would only add expenses to Edgar's estate.
Behr, Edgar's three surviving daughters, and Almuth's two brothers (the beneficiaries of her trust) participated in the settlement conference and reached an agreement. Under their agreement, in exchange for a payment of $100,000 from Almuth's estate, Edgar's children agreed to waive all claims to the assets of Almuth's estate; to withdraw all pending petitions and objections filed in the case relating to Almuth's estate; "to refrain from filing any additional petitions, objections or appeals in that [matter] except to enforce the terms of this Agreement, either individually or in any representative capacity[;] and[,] to the fullest extent legally allowable, waive any future claims against [the Almuth] Estate on the part of Edgar Hayes, Jr. or his Estate[.]" In turn, Almuth's brothers agreed to waive all claims to the assets of Edgar's estate. The settlement agreement disclaimed any admission of "liability, culpability, negligence, or wrongdoing."
Edgar had four daughters; his eldest daughter, Donna, had passed away. Edgar's son was not present at the settlement conference but subsequently filed a joinder in and consent to the settlement agreement.
The record shows Almuth's estate had at least one claim pending against Edgar's estate for Edgar's share of unpaid taxes. --------
Behr petitioned the court for approval of the settlement. Hawkins objected, explaining that she had not attended the settlement conference "[d]ue to the limited resources of the Edgar Estate." Hawkins believed that, because "Edgar's adult children represented the Edgar Estate[,] . . . any settlement would be directed to the Edgar Estate." "This belief was reasonable," she argued, because "the objections filed by Edgar's adult children repeatedly made the claim that the assets that were transferred to [Almuth's estate] rightly belonged to [Edgar's estate]." Hawkins took the position that the settlement proceeds should be directed to Edgar's estate, not to Edgar's children individually.
In response, Behr argued that because Hawkins was not a party to the settlement, she lacked standing to object to it; that her objection amounted to an attempt to gain personally from the settlement by way of administration fees, in violation of her fiduciary duty of loyalty and in conflict with Edgar's estate's interests; and that she was equitably estopped from objecting to the settlement by her refusal to participate in the mandatory settlement conference and by her prior refusal to pursue claims against Almuth's estate, which claims, Behr contended, were now barred by applicable statutes of limitation.
The court initially approved the settlement but blocked the settlement funds from disbursement to consider whether they should be distributed to Edgar's children individually, as prescribed by the settlement agreement, or to Edgar's estate, as requested by Hawkins. Hawkins and Edgar's children filed additional briefs presenting their respective positions on approval of the settlement.
At a subsequent hearing, the court explained it was inclined to approve the settlement as written and disburse the funds to Edgar's children individually, noting:
It seems to me that there were people that participated in the settlement and are bound by the settlement and are getting the benefits and the burdens of the settlement. And then there's another person that did not participate in the settlement, [and] is not, to the extent that I can see, bound by the settlement. To the extent the settlement affects [Edgar's] estate at all, it seems to me it gives them a benefit, because the heirs in [Almuth's] estate—or beneficiaries in [Almuth's] estate have waived their claims.Ultimately, the court approved the settlement as written, and Almuth's estate paid the funds to Edgar's children.
Hawkins appealed. Behr moved to dismiss the appeal on the ground that Hawkins lacked standing. We denied the motion to dismiss, concluding that filing the objection to the settlement conferred sufficient standing to appeal and that Hawkins was aggrieved by the trial court's order approving the settlement.
DISCUSSION
A. Standard of Review
The parties disagree on the applicable standard of review. Hawkins claims the facts are not in dispute and matters presenting pure questions of law are subject to de novo review. Although Behr does not specifically address the applicable standard of review, he appears to contend we should apply an abuse of discretion standard. We agree with Behr.
We review a probate court's approval of a settlement for abuse of discretion. (Estate of Green (1956) 145 Cal.App.2d 25, 28.) "In probate cases, as in other cases, a reviewing court must resolve all conflicts in the evidence in favor of the judgment or order under appeal." (Estate of Wilson (1953) 116 Cal.App.2d 523, 531.) " ' "The burden is on the party complaining to establish an abuse of discretion . . . ." ' " (Blank v. Kirwan (1985) 39 Cal.3d 311, 331), and, " ' "unless a clear case of abuse is shown and unless there has been a miscarriage of justice[,] a reviewing court will not substitute its opinion and thereby divest the trial court of its discretionary power." ' " (Ibid.) B. Applicable Legal Principles
The personal representative of an estate may settle a claim against the estate if it is to the advantage of the estate to do so. (Prob. Code, § 9830, subd. (a)(1).) Authorization by order of court is required if the settlement requires transfer from the estate of an amount exceeding $25,000. (Id., § 9833.)
Public policy strongly favors settlements of litigation. Indeed, "settlement agreements ' "are highly favored as productive of peace and good will in the community," ' as well as ' "reducing the expense and persistency of litigation." ' " (Neary v. Regents of Univ. of California (1992) 3 Cal.4th 273, 277, quoting McClure v. McClure (1893) 100 Cal. 339, 343.) In probate actions, public policy favors settlements "in the interest of the preservation of family ties, the adjustment of equities, and avoiding nonproductive waste of the assets of the estate." (Estate of Schuster (1984) 163 Cal.App.3d 337, 342.) "[E]ven though there is a strong public policy favoring the settlement of litigation, this policy does not excuse a contractual clause that is otherwise illegal or unjust." (Timney v. Lin (2003) 106 Cal.App.4th 1121, 1127.) C. The Court Did Not Abuse Its Discretion in Approving the Settlement
Hawkins contends that property belonging to Edgar's estate obtained by litigation and settlement is subject to administration in Edgar's estate, and that the provision directing funds to Edgar's heirs is illegal and should be cancelled while the remainder of the agreement should be allowed to stand. Alternatively, Hawkins contends the agreement should be cancelled or rescinded because Edgar's estate would suffer serious injury if it were left to stand, and because the agreement prejudices the public interest. Hawkins has not met her burden to establish the court abused its discretion.
We note at the outset that the fundamental premise underlying all of Hawkins's contentions is unfounded. Hawkins maintains that property belonging to Edgar's estate was obtained from Almuth's estate by litigation and settlement. This issue was never litigated or otherwise resolved. There was no judicial determination or stipulation that assets from Almuth's estate properly belonged to Edgar's estate. To the contrary, the settlement agreement explicitly disclaimed liability and made no admission or confirmation that any asset, including the settlement funds, belonged to Edgar's estate. As Behr maintained and the court acknowledged, the settling parties entered into the agreement "to buy peace and to settle the long litigation." Notably, it was Edgar's adult children, not his estate, who aggressively litigated against Almuth's estate and asserted they were entitled to certain assets. Hawkins did not take the position that Edgar's estate was entitled to any assets in Almuth's estate, until after the settlement. There is no evidentiary support for Hawkins's conclusory and belated claim that the settlement proceeds belong to Edgar's estate.
Similarly unfounded is Hawkins's position that Edgar's adult children litigated for years against Almuth's estate on behalf of Edgar's estate. Edgar's adult children repeatedly averred that assets in Almuth's estate instead should be in Edgar's estate. At the same time, however, Edgar's adult children consistently took positions that were not aligned with Edgar's estate's interests: they petitioned to remove Hawkins as administrator of the estate; they sought a court order directing Hawkins to take certain actions, which Hawkins refused to do; and they sought to block Hawkins from liquidating estate assets. Hawkins cites no authority for the proposition that heirs of an estate necessarily represent the estate's interests, rather than their own. There is no reasonable factual or legal basis to conclude the children were representing the interests of Edgar's estate at the mandatory settlement conference.
We also reject Hawkins's argument that the settlement agreement contains an illegal or otherwise unenforceable provision. Hawkins relies on Olson v. Toy (1996) 46 Cal.App.4th 818, 825 (Olson) to support her argument that "a decedent's property recovered by beneficiaries would be personal property of that decedent's estate and is subject to administration." In Olson, the appellate court reversed a trial court order sustaining a demurrer to a putative heir's action to invalidate decedent's trust. Defendants in that action argued, and the trial court found, that the putative heir lacked standing to challenge the trust. The appellate court reversed, finding that the putative heir did have standing. In so finding, the appellate court acknowledged that the putative heir "could not acquire possession of the trust assets directly since they must first be delivered to the decedent's personal representative for distribution under the will." (Id. at p. 823.) The Olson court further noted, "an estate does not take title to the decedent's property. When a person dies, title to his or her property vests in the heirs or devisees, subject to administration. [Citation.] Thus, if the trust is declared invalid and the trust assets are delivered to the decedent's personal representative, they are to be held by the representative solely for distribution according to the terms of the decedent's will." (Id. at p. 825.)
Olson might support Hawkins's position if a judicial determination had been made that assets from Almuth's estate rightfully belonged in Edgar's estate—those transferred assets would then be held by Hawkins, as Edgar's estate's representative, subject to administration. Here, as already noted, there was no such determination or stipulation regarding the character of any assets. Absent such a judicial determination, there is no basis for requiring the settling parties to attribute their settlement proceeds to Edgar's estate for administration.
Finally, we reject Hawkins's arguments that the settlement injures Edgar's estate and prejudices the public interest. The court found that the settlement benefitted Edgar's estate because the beneficiaries of Almuth's estate waived their claims against Edgar's estate. We see no reason to disturb this finding on appeal. Moreover, public policy favors settlement of litigation, and we note that this settlement of Almuth's estate removes an obstacle that previously prevented the closure of Edgar's estate. Under the circumstances of this case, the court did not abuse its discretion in balancing any competing interests and concluding that the settlement should be approved as written.
DISPOSITION
The order is affirmed. The parties shall bear their own costs on appeal.
GUERRERO, J. WE CONCUR: HUFFMAN, Acting P. J. O'ROURKE, J.