Opinion
B289582
03-13-2020
ROSEANNA REVELL, as Personal Representative, etc., Plaintiff, Cross-defendant and Respondent, v. BURLISON LAW GROUP et al., Defendants, Cross-plaintiffs and Appellants.
Lynberg & Watkins, Michael J. Larin; Orren & Orren and Tyna Thall Oren for Defendants, Cross-plaintiffs and Appellants. No appearance for Respondent Roseanna Revell.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. BP140980) APPEAL from a judgment of the Superior Court of Los Angeles County, Lesley C. Green, Barbara R. Johnson, Judge. Affirmed in part; remanded in part. Lynberg & Watkins, Michael J. Larin; Orren & Orren and Tyna Thall Oren for Defendants, Cross-plaintiffs and Appellants. No appearance for Respondent Roseanna Revell.
____________________
INTRODUCTION
This appeal is prompted by a sordid chain of events commencing when Ruby Revell (Ruby) executed a power of attorney appointing Bret Lovett (Lovett) her attorney-in-fact. Ruby filed a petition alleging, among other things, that Lovett breached his fiduciary duties to her under the power of attorney by obtaining her inheritance and then refusing to turn it over to her. After a court trial, the probate court found Lovett had in bad faith breached his fiduciary duties to Ruby. The court also found attorney Robert C. Burlison, Jr., (Burlison) and his law firm Burlison Law Group (BLG) had, among other things, ratified Lovett's bad faith actions in obtaining and failing to distribute her inheritance. The probate court awarded Ruby compensatory damages of $114,646.01 (the value of her inheritance), double damages pursuant to Probate Code section 4235.1, and attorney fees and costs. Liability on the judgment was joint and several as to Lovett, Burlison, and BLG. Only Burlison and BLG appeal. We affirm all but the double damages award as to Burlison and BLG, which we remand for findings on the issue of bad faith.
Ruby Revell was the original petitioner in the trial court. She died during the pendency of the action and her daughter, Roseanna Revell, substituted in as the personal representative of Ruby's estate. To avoid confusion, we refer to the Revells by their first names. In our discussion, we continue to refer to Ruby as petitioner.
All further statutory references are to the Probate Code unless otherwise indicated.
FACTUAL AND PROCEDURAL BACKGROUND
A. Ruby Signs the Power of Attorney
Irene L. Ryan, Ruby Revell's grandmother, established the Irene L. Ryan Trust dated October 8, 2001. The primary beneficiaries in equal shares were Irene's children, Yvonne Ryan (Ruby's mother) and Gary A. Ryan. On October 28, 2001, Irene deeded to the Trust real property she owned at 6494 Victoria Circle, Buena Park, California (the property). Irene died in 2008 and Yvonne and Gary became the successor trustees of the Trust. After Irene's death, Yvonne lived at the property, which remained in the name of the Trust. Yvonne died in 2010 and Gary became sole trustee of Trust.
Upon Yvonne's death in 2010, Ruby, her sole heir, became a beneficiary of the Trust entitled to Yvonne's 50 percent share of the assets. Ruby was a paraplegic, confined to a wheel chair due to a car accident. Before Yvonne died, Ruby was not aware of the Trust itself, but she knew that her mother had some interest in the property.
In April, 2011, Ruby obtained Lovett's name and telephone number as someone who could assist her in finding assets that were held in Yvonne's name. Ruby called Lovett seeking help in preparing documents to claim death benefits from Yvonne's Teamster pension plan. Lovett prepared a general power of attorney (POA), which appointed him Ruby's attorney-in-fact with full power to act on her behalf. On July 27, 2011, Ruby signed the POA which was also notarized.
Two weeks before their meeting, Lovett learned through his own research that Ruby was entitled to a share of the real property owned by her grandmother's trust. The record is silent as to whether he informed Ruby about his discovery. Instead, Lovett prepared an "Agreement" which purported to give him as a fee 85 percent of the value of any real property "left behind" in Yvonne's name which he recovered for Ruby. The Agreement states in pertinent part:
"I, Ruby R. Revell enter into this agreement and General Power of Attorney for services on this date with Brett Lovett. It is my understanding that my mother Yvonne Ryan has deceased with no last will and testament and as such I, as her only surviving heir need assistance in ascertaining if I have any claim to assets or valuable left behind in her name.
"I have no available monetary means to pay for services needed and due to my current financial situation so agree to the terms set forth here, namely:
"(a) If any account(s), life insurance proceeds, pension plans, or death benefits are located and attainable, I request that the full sum of these benefits be received by May Ruby R. Revell, and I will not pay a percentage or fee for the assistance needed to acquire such funds.
"(b) If any interest in real property is found, and that real property is found to have any equity value, I agree for services rendered on my behalf that I ask for the first 15% of any value, if any value is found, come to me Ruby R. Revell as beneficiary, and I relinquish any right to any percentage of value up to and above 15% in any real property found to have any equitable value for services rendered on my behalf."
The unsigned and unnotarized Agreement, purportedly presented by Lovett to Ruby when she signed the POA, was only initialed. B. Lovett Asserts Authority Under the POA
Ruby signed the POA on July 27, 2011. By August, she had not received the Teamster pension benefits and Lovett was not returning her telephone calls. When she finally spoke to him, she asked him about the property. She also orally revoked the POA in the presence of her daughter Roseanna and told Lovett he no longer had authority to act on her behalf. Ruby herself then contacted the Teamster pension administrator and directed that the benefits be sent directly to her rather than Lovett. She later received Teamster pension benefits totaling $11,772.80. When Lovett discovered Ruby had received the pension benefits directly rather than the benefits going directly to him, he thought she was underhanded for taking the pension money. He later told her he would do something "different" with Ruby's share of the real property in the Trust. He said this, knowing he had drafted an agreement whereby he would not be compensated for helping her recover the pension benefits.
Even before Ruby signed the POA on July 27, 2011, Lovett had prepared and sent a letter on July 13, 2011 to Gary Ryan, the trustee of the Irene Ryan Trust. The letter, written on BLG letterhead, and copied to the Burlison Law Group, referred to the "PROBATE OF THE ESTATE OF YVONNE RYAN." He falsely stated that "our office has been retained by Ms. Ruby Revell in relation to her legal right to file for LETTERS OF ADMINISTATION" and invited Gary Ryan to call him. At this time Lovett solely owned and operated a mediation group known as "Resolve Mediation Center" which had the same office address as the Burlison Law Group, a professional corporation solely owned and operated by Robert C. Burlison, a licensed California attorney. Lovett, who presented himself as a paralegal (he was not certified), sometimes worked with Burlison providing mediation services. He used BLG office space sometimes and referred cases to Burlison. He was not a BLG employee, although he represented on the Internet that he was part of the firm. The law firm took messages for him and, indeed, when Ryan called the office, the law firm simply stated Lovett "wasn't in right now." Lovett also resided in rental property owned by Robert Burlison.
Based on Lovett's July 13, 2011 correspondence, trustee Gary Ryan believed Lovett was an attorney representing Ruby in a court action involving her mother Yvonne's estate. In subsequent telephone calls, Gary Ryan informed Lovett that because Ruby wanted her share of the Trust assets now, he would have to sell the property rather than fix it up and rent it out. Lovett recommended a real estate agent for the sale, again giving Gary Ryan a false impression that the agent had been approved by the probate court, when she had not. The next thing Gary Ryan knew, a real estate agent contacted him. Gary Ryan believed, based on Lovett's statements to him, that she had been selected by the court. Gary Ryan put the property up for sale through the agent. In December 2011 Gary Ryan informed Lovett that the property had been sold.
On December 29, 2011, Lovett drafted another letter to Gary Ryan on BLG's letterhead. He forged Burlison's name on the letter and copied himself on the letter to make it look like the letter was really been written by Burlison. This letter was written, again falsely, on behalf of the Estate of Yvonne Ryan. Lovett demanded that Gary Ryan, to avoid "any further need for legal action to move forward," send Ruby's share of the proceeds of the sale of the property no later than December 30, 2011, to Lovett in a check payable to "State DPS," a d/b/a used by Lovett. Gary Ryan, believing that Lovett was an attorney representing Ruby in a probate action, sent Ruby's inheritance of $114,646.01 to Lovett as directed. Ten days later Gary Ryan left a message for Lovett asking for the court filing number of the Estate of Yvonne Ryan probate action. On January 11, 2012, Lovett sent an email to Gary Ryan, which he copied to Burlison, acknowledging Gary's phone message and falsely promising to call back with the court filing number. He never did. Neither did Burlison.
Before Lovett sent the December 29 letter, he left a phone message for Robert Burlison informing him about the letter and "explaining" what he was doing. He also later spoke with Robert Burlison about the letter, explaining why he sent it under Robert Burlison's forged signature—for increased credibility. He also believed he could retain counsel for Ruby under the authority of the POA. Burlison did not disavow the letter to Ruby, Lovett or Gary Ryan, nor did Burlison, Lovett, or anyone from BLG contact Gary Ryan to correct the false statements in the letter.
When Lovett sent the letter to Gary Ryan, he believed his relationship with Ruby was "adversarial" so he "felt the need" to invoke legal action. He did not, however, tell her he could no longer act as her attorney-in-fact due to the conflict. C. Lovett Retains Ruby's Inheritance
Now that Lovett had Ruby's inheritance in hand, he took no steps to remit it to her. Ruby had called and left him a message saying she knew the property had been sold and she wanted to obtain the proceeds of the sale. Instead, he ignored her numerous emails. When Ruby called in January, 2012, Lovett told her because she had gone "behind my back" in redirecting the Teamster benefit to herself, "[he was] not going to allow that to happen a second time." Otherwise he did not take her calls. Instead, he turned to Burlison for assistance.
On January 11, 2012, Lovett also emailed Gary Ryan, as set out above, in response to Ryan's query about the case number for Yvonne's probate action. Lovett told Gary Ryan he had about "17 manipulative messages . . . from Ruby," that she was not entitled to any information, that she would receive what the state allowed her to receive, and until then she had to wait. He cautioned Ryan about dealing with her.
On or about February 1, 2012, Lovett explained to Burlison that he and Ruby were in a conflict situation and he needed a third party to hold her inheritance funds. Lovett was afraid that Ruby was going to "stiff" him again like she did with the Teamsters money. Burlison suggested he could hold the funds in an escrow account. He did not indicate any problem acting as the escrow holder. After reviewing the POA and Agreement, Burlison prepared and Lovett executed, individually and purportedly on behalf of Ruby through the POA, an Escrow Holder Agreement (Escrow Agreement). Lovett signed the agreement on Ruby's behalf without getting her authority to do so because, he thought she would not agree to the Escrow Agreement and "wouldn't sign it." On February 28, 2012, according to BLG's accounting, he tendered $114,646.01 to Burlison. The Escrow Agreement provides that BLG, as Escrow Holder, would distribute Trust funds only as "mutually" directed by both parties in writing; it purported to grant BLG a fee of 1 percent from the Trust funds. The Escrow Agreement failed to set out any purpose for holding the funds in escrow; it only contained conditions for the release of the funds.
In June 2012, Ruby asked Gary Ryan about her inheritance. Gary told her he had distributed her share of the proceeds of the sale of the property to "State DPS" as her attorney Burlison had directed. Ruby denied having an attorney or giving anyone authority to request distribution of her inheritance. On June 18, 2012, Gary Ryan sent an email to Burlison asking him to contact Ruby about the disposition of her inheritance. Burlison replied to Gary's email, stating BLG was acting as "escrow of the funds received for Ms. Revell and Legal Aid Information," apparently another entity name used by Lovett, although Burlison was unsure of its origin. Burlison and BLG promised to draft escrow instructions to direct where the funds should be distributed "[n]ow that we have some contact information." They did nothing of the sort. They also failed to disclose that they had already distributed over $60,000 of the money to Lovett through escrow. D. Ruby Retains Counsel
In August, 2012, Ruby retained counsel who confirmed with Gary Ryan that he had tendered the inheritance to Lovett and State DPS as he been instructed by Ruby's "lawyers." Counsel contacted Burlison, who was very evasive "and tried to push everything towards Mr. Lovett." On August 28, 2012, Ruby's counsel wrote to Burlison demanding an accounting and immediate disbursement of the inheritance funds to Ruby. On August 30, 2012, Burlison replied with "Escrow Account Statement" dated August 30, 2012 showing BLG had disbursed a total of $96,474.32 to Lovett and $1,146.46 to itself The current escrow balance was only $17,025.23. On August 31, 2012, Ruby's counsel wrote to Burlison objecting to the distributions and demanding immediate disbursement of all remaining funds to Ruby. Counsel also sent a letter to Lovett demanding an accounting of his actions acting as Ruby's agent under the POA. Similar demands went out on September 6 and 7, 2012 to no avail. On September 7, 2012, Burlison and BLG sent a reply, refusing to tender the remaining funds to Ruby unless she signed a release for the prior distributions. Ruby filed suit. E. The Probate Court Holds Lovett and Burlison Liable
On April 29, 2013, Ruby filed a petition in the probate court against Lovett, Burlison, and BLG. The Second Amended Petition, filed December 18, 2015, sought an accounting from Lovett (First Claim). It alleged breach of contract by Lovett (Second Claim) with a prayer for compensatory damages of at least $114,646.01; conversion by Lovett and Burlison (Third Claim) and breach of fiduciary duty by Lovett and Burlison (Fourth Claim) with a prayer for compensatory damages of at least $114,646.01, surcharge, and punitive damages in an amount appropriate to punish and set an example of respondents. The Fifth Claim alleged violations of the Power of Attorney law, section 4238, subdivision (a); 4541, subdivision (b); and 4204 by Lovett, Burlison and BLG with a prayer for an order surcharging Lovett, Burlison and BLG for all damages caused by their actions and inactions in connection with the POA and their receipt of the inheritance. As to all claims for relief, Ruby requested an award of attorney fees and costs.
On April 22, 2014, Lovett filed his own accounting acknowledging that $96,474.32 of the inheritance was distributed to him; $1,146.46 was paid to BLG in escrow fees; and BLG held a balance of $17,025.23.
The Second Amended Petition was tried to the court on November 29 through December 1, 2017. On January 4, 2018, the probate court issued its Statement of Decision, finding the facts set out above. In addition, the court resolved specific disputed facts and made the following findings of fact:
• Ruby never signed the Agreement giving Lovett 85 percent of the value of any real property he recovered on her behalf;
• Ruby orally revoked the POA in August 2011 when Lovett failed to procure the pension funds.
• Lovett was infuriated when Ruby obtained the Teamster benefits by "going behind his back." He later used this incident to justify his lies to her despite the fact that the Agreement she allegedly signed provided that he would not be compensated for recovering the pension.
• "Virtually nothing" in the July 13, 2011 letter from Lovett to Gary Ryan was truthful in that the Burlison letterhead gave the false impression that it was from an attorney; Lovett falsely implied that he was an attorney with BLG representing Ruby; it references the "Probate of the Estate of Yvonne Ryan" when there were no probate proceedings; it falsely stated BLG had been retained by Ruby "in relation to her legal right to file for 'Letters of Administration'; it stated that once "the court issues 'Letters' to Ms. Revell" those documents would be used "for proper retitling of the deed" to the Buena Park property;
• The July 13, 2011 letter from Lovett to Gary Ryan was "phrased to intimidate Ryan by implying he was being contacted by a lawyer and that court action was pending."
• Lovett's December 29, 2011 letter to Ryan demanding that he tender Ruby's inheritance to him was also full of misrepresentations. It implied there was a pending probate for the Estate of Yvonne Ryan and that BLG and Burlison were counsel for the estate. It deceptively threatened "further" legal action if Ryan did not tender the funds. The State DPS account was an account controlled by Lovett. Lovett made the demand so he could claim that Ruby's share of the sale was subject to his 85 percent fee.
• On January 11, 2012, when Lovett emailed that he would give Gary Ryan the number of the probate action, he implied that he was working with Burlison as they had had a " 'busy week' " together. He told Ryan he had received "about 17 manipulative messages on our voicemail from Ruby over the last week, be cautious about providing her any information at all, she is not entitled to any information other than what you have provided our office as trustee, she is so used to manipulating that she doesn't know how to deal with the reality that we don't allow her to do so." (Boldface omitted.) He falsely implied the court would determine what Ruby would receive by telling Gary Ryan that they told her "she will receive what the State allows her to receive, until then she has to wait." (Boldface omitted.)
Lovett took an adversarial attitude toward her, refusing to take her calls and complaining about her voicemail messages. He falsely told Ryan that Ruby was not entitled to information and that she had to wait for her money from the State, when all along he had it in his possession not subject to any court or state order.
• After he received Ruby's inheritance and refused to disburse her funds to her, Lovett acted with the knowledge that Ruby was vulnerable, disabled and impoverished.
• Burlison and BLG refused to remit funds to Ruby, citing the Escrow Agreement's stipulation that both parties must mutually agree to a distribution, yet they distributed funds on two occasions to Lovett without Ruby's consent.
• Burlison and BLG ratified Lovett's fraudulent acts against Ruby.
• Lovett's purported 85 percent "fee" was unconscionable and Burlison and BLG, upon review of the Agreement and POA, should have known as much.
• The totality of the circumstances dictated that Burlison formed an attorney-client relationship with Ruby, with attendant fiduciary duties, when he failed to disavow the false representations in Lovett's correspondence with Gary Ryan.
The trial court found Lovett's testimony on cross-examination by Burlison "entirely incredible" as it was clear to the court that "Burlison was bullying Lovett, and Lovett was amenable to trying to help Burlison in any way he could." As to Burlison, the court "finds that Burlison is savvy and in this case would testify to anything which would relieve him of responsibility for Lovett's actions. The Court could not find him to be credible in view of the overwhelming evidence that he was on notice of Lovett's overreach and his own potential liability and sought only to assist Lovett with his scheme while also attempting to distance himself from liability." The court made express findings that Lovett acted in bad faith with malice and fraud and Burlison and BLG did not act with malice, fraud, or oppression. The court made no findings as to whether Burlison and BLG acted in bad faith. The court imposed $114,646.01 in compensatory damages and $229,292.02 in double damages jointly and severally against Burlison, BLG, and Lovett.
The corrected judgment, of which the court takes judicial notice at appellants' request, mirrors the language of the statement of decision.
DISCUSSION
I. The Statement of Decision and Judgment Are Ambiguous As to Burlison's and BLG's Liability for Bad Faith Damages Under Section 4231 .5, Subdivision (c).
Appellants argue, and we agree, that the statement of decision and judgment are ambiguous as to Burlison's and BLG's liability for bad faith damages under section 4231.5. Section 4231.5 provides, in pertinent part:
"(c) If a court finds that a person has in bad faith wrongfully taken, concealed, or disposed of property that belongs to a principal under a power of attorney, . . . the person shall be liable for twice the
value of the property recovered by an action to recover the property or for surcharge."
Here the trial court found Lovett "acted in bad faith by wrongfully taking Ruby's property while acting as her attorney-in-fact." The court found that "[f]or his bad faith breach of his duties to Ruby, Lovett is liable to Petitioner for double damages in the additional amount of $229,292.02." The court also found that Lovett acted with malice and fraud and set a trial on punitive damages for a future date. Appellants do not challenge these findings.
At the second phase of the trial, the trial court declined to award punitive damages against Lovett.
Nevertheless, as to Burlison and BLG, the trial court made no finding at all with respect to bad faith; the record is silent. The court did, however, expressly find that they were not liable for punitive damages: "The Court finds that Petitioner did not prove malice, fraud or oppression on the part of Burlison/BLG by clear and convincing evidence, so no punitive damages are ordered against Burlison/BLG."
Despite the absence of a bad faith finding against Burlison and BLG, the trial court then found: "However, to be clear, the liability of Respondents for those damages [compensatory damages of $114,646.01 and double damages of $229,292.02] is joint and several, so to the extent that Lovett fails to satisfy the judgment against him and in favor of Petitioner, Burlison and BLG are required to satisfy that judgment." This statement appears to hold Burlison and BLG liable for the double damages awarded only against Lovett pursuant to section 4231.5 based on his actions taken in bad faith.
We agree with appellants that the statement of decision and judgment are ambiguous. The omission of an express finding of bad faith seems to contradict the finding of joint and several liability. It is unclear, among other things, whether or not the court intended to make a finding of bad faith on the part of Burlison and BLG; whether or not the court imposed joint and several liability on them for Lovett's bad faith actions based on its finding that they ratified Lovett's bad acts or on some other basis or theory; whether or not the joint and several liability was intended to apply only to actual damages only. It is important to note that just because the trial court found no oppression, malice or fraud by Burlison and BLG does not preclude a finding of bad faith. This is so because a showing of "bad faith" is not the equivalent of the malice, oppression or fraud required for punitive damages under Civil Code section 3294. Rather, "bad faith" can be many different things, depending on the context. (Hill v. Superior Court (2016) 244 Cal.App.4th 1281, 1285-1288 [setting out examples of bad faith vis-a-vis malice and oppression]; Estate of Kraus (2010) 184 Cal.App.4th 103, 111-112 [section 859 double damages—written in language identical to section 4231.5—are not punitive damages and the proof required for punitive damages is not required].)
In their Opening Brief, appellants suggest remand so that the trial court can clear up the ambiguity. We believe the prudent course is to remand to the trial court to permit it to make a finding whether Burlison and BLG in bad faith wrongfully took, concealed or disposed of Ruby's property under the power of attorney, as set forth in section 4231.5. We direct the trial court not to reopen the evidence; it is to review the transcripts and record of the trial, entertain argument and briefing, as appropriate, and supplement its statement of decision and judgment so that the record is not silent on this issue. We indicate no opinion on how the trial court should rule.
In light of this ruling, we do not address appellants' alternative arguments that double damages are not supported by the evidence. At this point and without a finding of bad faith, a decision on appellants' alternative arguments would be nothing more than an advisory opinion. (Wilson & Wilson v. City Council of Redwood City (2011) 191 Cal.App.4th 1559, 1582-1583 [courts will decline to adjudicate a dispute if " ' "the abstract posture of [the] proceeding makes it difficult to evaluate [or] if the court is asked to speculate on the resolution of hypothetical situations" ' "]; Stonehouse Homes LLC v. City of Sierra Madre (2008) 167 Cal.App.4th 531, 542 [courts may not render advisory opinions on disputes which the parties anticipate might arise but which do not presently exist].) II. The Correct Amount of Double Damages is $229,292.02.
Appellants argue that if double damages are appropriate, the correct amount of double damages is $114,646.01, not $229,292.02. On this purely legal question, we disagree.
Double damages equal twice the amount of actual damages; they are a statutory penalty imposed in addition to the actual damages award. (Estate of Kraus, supra, 184 Cal.App.4th at p. 106 [affirming order under section 859 to pay twice the actual damage award as statutory damages in addition to actual damage award].) Section 859 and section 4231.5 are almost identically phrased. Under Estate of Kraus, we must reject appellant's argument. III. BLG Was An Escrow Holder.
The trial court found that the Escrow Agreement Burlison prepared and Lovett signed on February 1, 2012 stated that BLG had been retained by Lovett and Ruby as an "escrow holder" to retain the trust funds in "escrow." (The escrow holder accepted Lovett's signature on behalf of Ruby through the POA.) The Escrow Agreement provided that BLG as "escrow holder" would distribute the trust funds as mutually directed by the parties in writing and grants BLG a fee of 1 percent from the trust funds. The document failed to set forth any purpose for holding the funds in escrow; it only contained conditions for release of the funds.
An Escrow Account Statement was prepared on February 28, 2012, showing the deposit of $114,646.01 into the escrow account and distribution of the 1 percent escrow fee to BLG and $60,458.96 to Lovett. A later account statement, dated August 30, 2012 showed these distributions and another as well to Lovett in the amount of $36,015.36.
The trial court found that the Escrow Agreement was presumptively invalid under Financial Code section 17200 because BLG was not a corporation duly organized to engage in business as an escrow agent and not licensed for that purpose by the state of California. Appellants claimed at trial that an exception to the licensing requirement for real estate brokers performing acts incidental to a real estate transaction applied. The trial court rejected that argument, finding that the escrow was not established to facilitate a real estate transaction. The court found the entire Escrow Agreement void and found that because the Escrow Agreement was void, BLG and Burlison received the trust funds as a constructive trustee pursuant to Civil Code section 2224.
In their motion for new trial and on appeal, appellants have changed their theory, arguing they did not establish an "escrow" per se; instead they established a "bailment" which is the " ' "delivery of a thing in trust for some special object or purpose, upon a contract, express or implied." ' " (Greenberg Bros., Inc. v. Ernest W. Hahn, Inc. (1966) 246 Cal.App.2d 529, 531.) We disagree. As the trial court pointed out, the Escrow Agreement drafted by appellants never established or set out a special "object or purpose" for the deposit of the funds. It is clear appellants intended to and did create an escrow. Burlison and BLG accepted without question Lovett's false statement that the money involved a real estate transaction for a client with whom he was in an adverse relationship. Interestingly, they never even asked Lovett for the address of the real property.
Moreover, even if the escrow could be deemed a "bailment," under Civil Code section 1825, the holder of the goods "must give prompt notice to the person for whose benefit the deposit was made, of any proceedings taken adversely to his interest in the thing deposited, which may tend to excuse the [holder] from delivering the thing to him." (Civ. Code, § 1825.) Here the evidence establishes, and the trial court found, that appellants did not give Ruby notice of all the distributions they made to Lovett out of her funds, when the distributions were made. Whether a bailment or an escrow, it is clear that appellants violated their duty of care to Ruby by distributing her funds to Lovett without notifying her of the distributions. Then, in clear violation of Civil Code section 1822, which imposes a mandatory duty to deliver the personal property to the owner upon demand, they refused to remit the remaining balance of the funds upon her request, claiming they acted in good faith because the "escrow" documents forbade such a distribution without Lovett's consent, a claim belied by the trial testimony that Burlison refused to tender the funds to Ruby unless she signed a release with respect to the prior distributions to Lovett. We agree with the trial court that appellants established an unlawful escrow and then violated the very terms they themselves drafted. IV. Appellants Were Constructive Trustees of Ruby's Funds and Violated Their Fiduciary Duties to Her As Constructive Trustees.
The trial court found that because the Escrow Agreement was void, appellants held the funds subject to a constructive trust pursuant to Civil Code section 2224 which provides:
"One who gains a thing by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act, is, unless he or she has some other and better right thereto, an involuntary trustee of the thing gained, for the benefit of the person who would otherwise have had it."
Appellants now argue the evidence was insufficient to find a constructive trust. We disagree.
Our authority begins and ends with a determination whether, on the entire record, there is any substantial evidence—that is, of ponderable legal significance, reasonable, credible and of solid value—contradicted or uncontradicted, which will support the judgment. As long as there is such evidence, we must affirm. (Nordquist v. McGraw-Hill Broadcasting Co. (1995) 32 Cal.App.4th 555, 561; Estate of Beard (1999) 71 Cal.App.4th 753, 778-779.) Moreover, the reviewing court must consider the evidence in the light most favorable to the prevailing party, giving that party the benefit of every reasonable inference and resolving conflicts in support of the judgment. (Id. at p. 779.) "While substantial evidence may consist of inferences, such inferences must be 'a product of logic and reason' and 'must rest on the evidence' [citation]; inferences that are the result of mere speculation or conjecture cannot support a finding [citations]." (Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1633.)
A constructive trust may be imposed in practically any case where there has been a wrongful acquisition or detention of property. (Optional Capital, Inc. v. DAS Corp. (2014) 222 Cal.App.4th 1388, 1402.) To create a constructive trust as defined in section 2224, three conditions must be satisfied: the existence of a res (property or some interest in the property); the plaintiff's right to that res; and the defendant's acquisition of the res by some wrongful act. (Calistoga Civic Club v. City of Calistoga (1983) 143 Cal.App.3d 111, 116.)
Here substantial evidence supports the finding of a constructive trust. After learning that Lovett had lied to Gary Ryan about non-existent legal proceedings involving the Estate of Yvonne Ryan; after learning that Lovett had lied to Gary Ryan about BLG representing Ruby in her "legal action;" after learning that Lovett was now in an adversary and conflict position with the principal of the POA pursuant to which he was acting as attorney-in-fact (in violation of his own fiduciary duties); and after doing nothing to correct any of the false impressions and lies Lovett had told to Gary Ryan and Ruby, appellants agreed to assert control over Ruby's inheritance clearly for Lovett's sole benefit by creating an "escrow" account. By their own accounting, they took possession of $114,646.01 and then distributed all but $17,025.23 to Lovett without Ruby's knowledge or consent and in direct violation of the terms of the Escrow Agreement they had drafted. Appellants then refused to remit Ruby's inheritance to her upon her demand, asserting, as to Ruby only, that they could only do so upon the mutual consent of the parties. As the trial court stated, "Their subsequent disbursement of those funds to themselves and Lovett and their refusal to tender the balance to Ruby are acts constituting conversion." The trial court rightly concluded, as do we, that appellants wrongfully acquired and detained the entire $114,646.01 to which Ruby had a valid right of possession. The evidence is clear and convincing. The requirements of Civil Code section 2224 have been met.
In this regard, we also reject appellants' argument they are liable only for the $17,025.23 remaining in the escrow account after they distributed the balance to Lovett. We also reject their alternative argument that they are liable only for $53,040.59, the amount they contend was actually deposited by Lovett. Their own accounting established that Lovett deposited the entire amount of $114,646.01 into escrow and the court was entitled to credit that document over the actual testimony of Lovett and Burlison, which it found not clear and not credible. V. Appellants Are Not Shielded from Liability for Conversion by Their Reliance on the POA.
The trial court found that appellants ratified Lovett's fraud by doing nothing to correct his material misrepresentations to Gary Ryan and Ruby and then assisting in his attempt to keep Ruby's inheritance from her. The trial court found that they are liable for conversion of all the funds by acting as escrow holder, detaining her funds, distributing them to Lovett with knowledge that the 85 percent "fee" was unconscionable under the POA, and refusing to remit the ending balance to Ruby. Appellants argue that they are shielded from liability for conversion by Probate Code section 4303.
Section 4303 provides:
"(a) A third person who acts in good faith reliance on a power of attorney is not liable to the principal or to any other person for so acting if all of the following requirements are satisfied:
"(1) The power of attorney is presented to the third person by the attorney-in-fact designated in the power of attorney.
"(2) The power of attorney appears on its face to be valid.
"(3) The power of attorney includes a notary public's certificate of acknowledge or is signed by two witnesses."
Section 4301 provides:
"A third person may rely on, contract with, and deal with an attorney-in-fact with respect to the subjects and purposes encompassed or expressed in the power of attorney without regard to whether the power of attorney expressly authorizes the specific act, transaction, or decision by the attorney-in-fact."
Appellants are not entitled to rely on sections 4303 or 4301 for the simple reason that the trial court did not find that they relied on the POA in good faith. Rather, the trial court found appellants ratified Lovett's fraud upon Ruby. This finding is supported by the substantial evidence set out above and extinguishes any possibility of good faith reliance on the POA. As set out above, Lovett told appellants of his conflict with Ruby, his principal; stated he wanted to keep his principal's money from her; and enlisted appellants help to do so. Despite knowing of Lovett's perpetrated fraud on Gary Ryan and misrepresentations to Gary Ryan and Ruby, appellants embarked upon a course of conduct that was antithetical to the fiduciary relationship between principal and attorney-in-fact: they, as attorneys, assisted Lovett in taking an adversarial position to his principal and acting only in his own self-interest. Sections 4303 and 4301 do not protect such conduct.
Moreover, the trial court did not improperly reject appellants' defense. Based on the evidence that appellants, knowing of Lovett's fraud and misrepresentations, accepted the POA and "Agreement" without question, followed only Lovett's instructions, and ignored Ruby's demands for her inheritance, the trial court properly declined to allow appellants to successfully assert good faith reliance on the POA. Given appellants' lack of good faith and unlawful distribution of funds to Lovett, they were not entitled to a finding that they relied in good faith on the Escrow Agreement when they distributed the funds to Lovett only and not to Ruby. VI. The Trial Court Properly Found Joint and Several Liability for the $114,646.01 That Appellants and Lovett Converted In Concert.
The trial court found appellants and Lovett jointly and severally liable for actual damages in the amount of $114,646.01, the actual value of her inheritance. Appellants argue that evidence to support joint and several liability for actual damages is lacking because appellants and Lovett were found liable for different injuries to Ruby. We disagree.
Joint and several liability is imposed where each defendant who is a proximate cause of an indivisible injury remains individually liable for all compensable damages attributable to that injury. (American Motorcycle Assn. v. Superior Court (1978) 20 Cal.3d 578, 582.) Joint and several liability may be imposed only when there has been a concert of action. (Kesmodel v. Rand (2004) 119 Cal.App.4th 1128, 1144.)
Ruby's injury was the wrongful taking of her inheritance by Lovett's fraudulent conduct, which appellants were aware of and ratified by their unwillingness to correct Lovett's falsehoods to the people who relied upon them to their detriment and by their willingness to set up and manage an escrow account to "lawfully" distribute Ruby's funds to Lovett by authority of the POA. Appellants and Lovett may have played different roles in this drama, but they acted in concert to accomplish the overall goal - the wrongful and fraudulent detention of Ruby's funds. Joint and several liability is fully supported by the evidence. VII. Appellants' Argument As to Burlison's Personal Liability Is Forfeited.
In one paragraph with one citation to a case for a general proposition about the alter ego doctrine, appellants assert that because BLG was the named party to the Escrow Agreement, Burlison could not be personally liable for conversion.
This argument is inadequately supported by argument and legal authority. (In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814, 830 ["We are not bound to develop appellants' arguments for them."].) We may and do "disregard conclusory arguments that are not supported by pertinent legal authority or fail to disclose the reasoning by which the appellant reached the conclusions he wants us to adopt." (City of Santa Maria v. Adam (2012) 211 Cal.App.4th 266, 287.) VIII. The Award of Attorney Fees Is Fully Supported by the Record and Is Not Disproportionate.
Ruby moved for attorney fees in the amount of $192,095. Her motion was fully supported by time sheets setting out the work performed by and hourly rate of each attorney who worked on her case. The trial court awarded $172,885 in contractual attorney fees pursuant to Civil Code section 1717. The award was based on provisions in the Escrow Agreement which stated:
"If legal action is required to enforce this Escrow Agreement . . . the prevailing party shall be entitled to recover any and all costs of such action, including, but not limited to . . . reasonable attorney's fee[s] . . . ."
The award of contractual attorney fees is governed by equitable principles. (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1094-1095.) Factors to be considered in setting a reasonable award include the nature and difficulty of the litigation and the amount of money involved. (Id. at p. 1096.) In an action on a contract that provides for attorney fees, the prevailing party, whether specified in the contract or not, is entitled to fees. (Civ. Code, § 1717, subd. (a).) This is so even if the party prevails on the ground that the contract is inapplicable, invalid, unenforceable, or nonexistent. (Santisas v. Goodin (1998) 17 Cal.4th 599, 611.)
Appellants' argument is two-fold. First, they argue that the "true value" of the case was only $17,025.23 so that an award of $172,885 in attorney fees is disproportionate to the value of the case. We disagree. The "true value" of the case was, at a minimum and not considering the issue of double damages, $114,646.01, the total amount wrongfully disbursed or withheld from Ruby, the recovery of which she had to sue for. The award is not disproportionate.
Second, appellants had brought a cross-petition against Ruby and Lovett for indemnity under the terms of the Escrow Agreement. Ruby prevailed on the cross-petition. Appellants argue the attorney fees provision in the Escrow Agreement covers only Ruby's defense against appellants' cross-petition for indemnity under the Agreement. Not so. Ruby not only prevailed on the cross-petition seeking indemnity from her, but to do so, she had to prevail on her petition as well, which sought, among other things, to invalidate the Escrow Agreement, including the indemnity provisions. Appellants strongly relied on the Escrow Agreement as part of their defense and, by their defense, sought to "enforce" the terms of the Agreement. Ruby, however, prevailed on both the petition and cross-petition. She is entitled to attorney fees under the Agreement.
DISPOSITION
The award of double damages against Burlison and Burlison Law Group only under Probate Code section 4231.5 is vacated and remanded to the trial court for findings as to whether Burlison and Burlison Law Group acted in bad faith under Probate Code section 4231.5. We direct the trial court not to reopen the evidence; it is to review the transcripts and record of the trial, entertain argument and briefing, as appropriate, and supplement its statement of decision and judgment so that the record is not silent on this issue. We indicate no opinion on how the trial court should rule. Otherwise, the judgment is affirmed. The parties are to bear their own costs.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
STRATTON, J. We concur:
BIGELOW, P. J.
WILEY, J.