Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
Alameda County Super. Ct. No. RG04191837
Judge of the Superior Court of San Francisco City and County, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
The trial court granted summary judgment to the defendant in this legal malpractice action on the ground of unclean hands. As evidence of misconduct that justified the application of the unclean hands doctrine, the court relied on findings made in a prior probate court proceeding that it deemed binding on the plaintiff under the doctrine of collateral estoppel. We affirm.
Background
We first describe the background that led to the probate court proceeding on which defendant bases his collateral estoppel argument. We then summarize the probate court’s findings and the postjudgment procedural history of the probate action. Finally, we describe the procedural history of the case on appeal. The following facts are undisputed and are supported by evidence submitted in support of the defendant’s summary judgment motion.
Matt Lubin and Evelyn Cheroff divorced in 1981, but maintained a friendly relationship thereafter. In about 1985, they jointly purchased an apartment building on Hearst Avenue in Berkeley, California (Hearst Avenue property). Cheroff managed the property and they shared net income from the property.
In the late 1990s, Lubin was in his late 80s and his health deteriorated. Lubin told Cheroff he wanted to set up a living trust and will to effect his wishes for the testamentary disposition of his property. Schneider, the husband of Cheroff’s sister, drafted a trust document for Lubin dated September 18, 1999, which Lubin signed. The Trust was funded primarily by Lubin’s interests in the Hearst Avenue property and another parcel of real property. The Trust document provided that after Lubin’s death Cheroff would receive 10 percent of the Trust’s interest in the Hearst Avenue property and would become trustee of the Trust.
The Trust also provided that if Cheroff survived Lubin by at least 150 days she would receive all of the otherwise-undistributed residue of the Trust property. Because it appears that the Trust residue did not have a significant value compared to its real property interests, and because the parties do not contend that the value of the residue is significant in assessing the impact of the probate court’s rulings or the subsequent settlement, we shall not again refer to the gift of the residue.
In 2002, Schneider drafted an amendment to the Trust, which Lubin signed. The amendment increased Cheroff’s share of the Trust’s interest in the Hearst Avenue property from 10 percent to 70 percent. Neither the original Trust document, nor the 2002 amendment stated what percentage of the Hearst Avenue property was owned by Lubin and was thereby an asset of the Trust and what percentage was owned by Cheroff.
Lubin died on November 19, 2002 at the age of 92. Two of Lubin’s daughters, who were beneficiaries of the Trust upon Lubin’s death, petitioned the probate court to invalidate the gifts to Cheroff under both the Trust and the 2002 amendment and to remove her as trustee. (In re The Living Trust of Matt Lubin, Dated 9/18/1999 (Super. Ct. Alameda County, 2005, No. P-25678).) Shortly before trial in the probate action, Cheroff renounced her gift of 70 percent of the Trust’s interest in the Hearst Avenue property under the 2002 Trust amendment. A trial was held on the remaining issues.
Following trial, the petitioners drafted a proposed statement of decision and judgment and Cheroff filed objections. The court signed and filed the proposed statement of decision and judgment in January 2005.
The trial court prematurely signed and filed the proposed statement of decision and judgment on December 7, 2004, before the deadline for Cheroff to file her objections. At the parties’ joint request, the court vacated the December 7 filings and on December 8 Cheroff filed a 22-page set of objections.
The judgment invalidated all gifts to Cheroff under the Trust. The court found that Cheroff was a member of two classes of transferees to whom gifts are invalid unless certain statutory conditions are met. (Prob. Code, §§ 21350, 21351.) First, it found that she was related by marriage to Schneider, the drafter of the Trust document and 2002 amendment. (§ 21350, subd. (a)(2).) Second, it found Cheroff had a fiduciary relationship with Lubin as manager and cotenant of their jointly owned property. (§ 21350, subd. (a)(4).) The court found that none of the statutory conditions that would have validated the gifts to Cheroff had been met. However, it only discussed one of those conditions: Section 21351, subdivision (b), which provides that section 21350 does not apply if the instrument making the gift is reviewed by independent counsel who consults with the transferor and certifies that the transfer was not a product of fraud, menace, duress, or undue influence The court also made an express finding of misconduct: “The Court specifically finds that these purported gifts to Evelyn Cheroff in the Trust and the Amendment to the Trust were the product of fraud and undue influence perpetrated upon Matt Lubin by Evelyn Cheroff, her brother-in-law Eugene Schneider and her husband George Cheroff.” Moreover, the court awarded the petitioners attorneys fees pursuant to section 21351, subdivision (d), which authorizes such an award “[i]f the court finds that the transfer was the product of fraud, menace, duress, or undue influence.”
All statutory references are to the Probate Code unless otherwise indicated.
The court also found that Cheroff increasingly became “Lubin’s self-described ‘caretaker.’ ” However, the court did not expressly find that Cheroff was within the “care custodian” class of transferees described in section 21350, subdivision (a)(6).
The probate court mistakenly labeled this subdivision as section 21350, subdivision (a)(3).
The court also made more specific findings of fraud, self-dealing and breach of fiduciary duty, which we discuss in greater detail below.
The court also removed Cheroff as trustee pursuant to section 15642. That statute authorizes a court to remove as sole trustee any person described in section 21350, subdivision (a) (including a relative of the drafter of a trust document and a fiduciary of the transferee) unless the court finds or independent counsel has certified that the appointment of the trustee was consistent with the trustor’s intent and the trustor’s intent was not the product of fraud, menace, duress, or undue influence. (§ 15642, subds. (a), (b)(6), (b)(6)(B).) The probate court found that making Cheroff trustee “was not consistent with the settlor’s intent and to the extent the Trust instrument states otherwise, that statement was the result of both fraud and undue influence. Evelyn Cheroff and George Cheroff’s continued concealment of material facts from Matt Lubin prior to the preparation of the Trust and the amendment to the Trust and all times thereafter prior to the death of Matt Lubin constituted fraud.” The court awarded petitioners their attorneys fees under section 15642, subdivision (c), which authorizes such an award if “the court finds that the designation of the trustee was not consistent with the intent of the settler or was the product of fraud, menace, duress, or undue influence.”
Finally, the court found that the Trust owned 70 percent and Cheroff owned 30 percent of the Hearst Avenue property.
In April 2005, the court ordered Cheroff to pay $192,500 in attorneys fees to petitioners. In July, the court ordered Cheroff not to sell, transfer or encumber any interest in the Hearst Avenue property without the agreement of petitioners, settlement and dismissal of the appeal, reversal of the attorneys fee award, or payment of the fee award.
Cheroff appealed the January 2005 judgment. While her appeal was pending, the parties reached a settlement agreement. The agreement provided that the Trust’s and Cheroff’s ownership interests in the Hearst Avenue property were 60 percent and 40 percent respectively. Cheroff renounced her claims to any part of the Trust’s interest in the Hearst Avenue property. Cheroff was authorized to sell the property in her dual capacity as cotenant and trustee of the Trust. Of the net proceeds from the sale, $200,000 would go to the law firm that represented petitioners in the probate court proceeding; $50,000 to Cheroffs’ counsel; and $25,000 to Stephanie O’Connor, a petitioner and the daughter of Matt Lubin and Evelyn Cheroff. An additional $10,000 would be held in reserve to cover professional services fees incurred in connection with the sale. Of the remainder (including any unspent amounts from the $10,000 reserve), 60 percent would go to the Trust and 40 percent to Cheroff.
On November 16, 2005, at Cheroff’s request, this court dismissed the appeal and issued a remittitur forthwith. On November 29, the parties filed a joint “stipulation,” based on their settlement of the dispute, that the January 28, 2005 judgment and the two postjudgment orders “shall be vacated” or set aside and that the petition that commenced the probate court action “shall be dismissed with prejudice.” The court denied the stipulation without prejudice “for lack of authority . . . that this court can set aside/vacate the judgment and the award of attorney’s fees following the dismissal of the appeal.” Cheroff then filed an unopposed motion to vacate the judgment and the April 2005 and July 2005 postjudgment orders. She argued the judgment and orders contradicted terms of the settlement agreement that reinstated her as trustee and authorized her to sell the Hearst Avenue property and distribute the proceeds of the sale. The court granted the motion on January 6, 2006.
In the meantime, Cheroff had brought this suit against Schneider for legal malpractice. In April 2007, Schneider filed a motion for summary judgment. He argued that Cheroff was collaterally estopped by the probate court’s findings from denying she committed actual fraud against Lubin related to Trust assets, and that this fraud barred her from obtaining any relief in the malpractice action under the doctrine of unclean hands.
Cheroff filed the suit on December 30, 2004, shortly after the probate court issued its initial statement of decision and judgment invalidating all of the Trust’s gifts to her. In September 2005, the court exempted the malpractice action from case management time lines pending resolution of the appeal in the probate action. The case essentially remained dormant until April 2007.
The court granted summary judgment to Schneider. It ruled that the findings in the probate court’s statement of decision, which was not vacated, were binding on Cheroff under the doctrine of collateral estoppel and barred her under the doctrine of unclean hands from recovering from Schneider on the challenged transactions. Cheroff appeals from the judgment in Schneider’s favor.
Discussion
Summary judgment is appropriate “if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).) The party moving for summary judgment bears the burden of showing there is no triable issue of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 (Aguilar).) “A defendant or cross-defendant has met his or her burden of showing that a cause of action has no merit if that party has shown . . . that there is a complete defense to that cause of action. Once the defendant or cross-defendant has met that burden, the burden shifts to the plaintiff or cross-complainant to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.” (Code Civ. Proc., § 437c, subd. (p)(2).) In ruling on the motion, the court must draw all reasonable inferences from the evidence in the light most favorable to the opposing party. (Aguilar, at p. 843.) We review an order granting summary judgment de novo. (Id., at p. 860.)
Schneider moved for summary judgment on the ground that the unclean hands doctrine provided a complete defense to Cheroff’s single legal malpractice (professional negligence) cause of action. To prove this defense, he relies on findings made by the probate court in its January 2005 order, which he argues are binding on Cheroff in this action under the doctrine of collateral estoppel. We first consider whether collateral estoppel applies to the probate court’s findings. We then consider whether Schneider has proven his affirmative defense as a matter of law.
I. Collateral Estoppel
“The doctrine of collateral estoppel precludes relitigation of an issue previously adjudicated if: (1) the issue necessarily decided in the previous suit is identical to the issue sought to be relitigated; (2) there was a final judgment on the merits of the previous suit; and (3) the party against whom the plea is asserted was a party, or in privity with a party, to the previous suit. [Citation.]” (Producers Dairy Delivery Co. v. Sentry Ins. Co. (1986) 41 Cal.3d 903, 910 (Producers Dairy).) The burden of proving the requirements of collateral estoppel is on the party invoking the doctrine. (Vella v. Hudgins (1977) 20 Cal.3d 251, 257.)
We defer our discussion of whether the first factor is satisfied until the next section of this opinion, where we consider whether Schneider’s evidence (which consists primarily of the findings in the probate court opinion) establish his affirmative defense. As to the third factor, there is no dispute that Cheroff was a party to the probate court proceeding. The critical issue, therefore, is whether there was a final judgment on the merits of the probate court matter within the meaning of the collateral estoppel doctrine.
A. Sufficiently Firm Adjudication
Cheroff argues collateral estoppel does not apply because the underlying probate court judgment never became final and was not reviewed on appeal. For purposes of collateral estoppel, however, the “final judgment” rule is not applied so literally.
“ ‘[F]or purposes of issue preclusion [i.e., collateral estoppel] (as distinguished from merger and bar [i.e., claim preclusion]), “final judgment” includes any prior adjudication of an issue in another action that is determined to be sufficiently firm to be accorded conclusive effect.’ (Rest.2d Judgments, § 13, italics added.)” (Sandoval v. Superior Court (1983) 140 Cal.App.3d 932, 936 (Sandoval).) “ ‘Before [giving carry-over effect], the court should determine that the decision to be carried over was adequately deliberated and firm, even if not final in the sense of forming a basis for a judgment already entered. Thus preclusion should be refused if the decision was avowedly tentative. On the other hand, that the parties were fully heard, that the court supported its decision with a reasoned opinion, that the decision was subject to appeal or was in fact reviewed on appeal, are factors supporting the conclusion that the decision is final for the purpose of preclusion.’ ([Rest.2d Judgments, § 13, com. b.])” (Id., at p. 936.)
“ ‘Res judicata’ describes the preclusive effect of a final judgment on the merits. Res judicata, or claim preclusion, prevents relitigation of the same cause of action in a second suit between the same parties or parties in privity with them. Collateral estoppel, or issue preclusion, ‘precludes relitigation of issues argued and decided in prior proceedings.’ [Citation.]” (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 896.) Claim preclusion is also referred to as merger and bar. (7 Witkin, Cal. Procedure (5th ed. 2008) Judgment, § 336, p. 940.)
Several courts have given collateral estoppel effect to judgments that never received full appellate review because the cases settled on appeal, even when the cases were dismissed by the plaintiff with prejudice following the settlement. In the prior litigation at issue in Sandoval, a jury found by special verdict that the design of a machine was defective. (Sandoval, supra, 140 Cal.App.3d at p. 935.) The court entered judgment for the plaintiffs to recover $262,500 and the defendant manufacturer appealed. (Ibid.) While the appeal was pending, the parties reached a settlement pursuant to which the manufacturer paid the plaintiffs $218,837, plaintiffs signed a full release of claims that stated the manufacturer was not admitting liability, and “the plaintiffs agreed to dismiss their action [ ] with prejudice.” (Ibid.) The appeal was dismissed. (Ibid.) In a separate action, a plaintiff sued the manufacturer for injuries caused by the same machine. (Ibid.) The plaintiff invoked the special verdict finding of design defect in the prior action as offensive collateral estoppel against the manufacturer. (Ibid.) The trial court ruled collateral estoppel was inapplicable because the judgment in the prior action never became final. (Ibid.)
The court of appeal disagreed: “[O]nce the appeal [was] settled favorably to the plaintiff and thereafter dismissed, . . . the trial court judgment reemerge[d] with sufficient finality to permit the application of collateral estoppel.” (Sandoval, supra, 140 Cal.App.3d at p. 937.) “We see nothing in the dismissal with prejudice concept that forecloses a finding of finality sufficient to preclude relitigation of the issues decided against the defendant. This is particularly true when the agreement to dismiss with prejudice is part of a substantial settlement in plaintiff’s favor after a final judgment in the trial court. Such a settlement and dismissal of the lawsuit can fairly be construed as a judgment favoring plaintiff on the merits. To hold otherwise would exalt form over substance.” (Id., at p. 939, fn. omitted; see also McClain v. Rush (1989) 216 Cal.App.3d 18, 25, 28 [collateral estoppel applies where case settled while appeal pending and case was subsequently dismissed].)
The California Supreme Court agreed with and followed Sandoval in Producers Dairy, where it held: “[S]ettlement of a prior adjudication during the pendency of an appeal may render the judgment sufficiently final to support the doctrine of collateral estoppel, provided other factors of certainty and finality are satisfied. ([Sandoval, supra, 140 Cal.App.3d] at pp. 936-940.)” (Producers Dairy, supra, 41 Cal.3d at p. 911.) In Producers Dairy, a judgment for the plaintiff was affirmed on appeal but settled before the time to seek review in the Supreme Court had expired. (Id., at p. 907.) The judgment had awarded the plaintiff $400,000 plus costs and interest. (Ibid.) Under the settlement, the defendant paid the plaintiff $548,000 (which was less than the aggregate amount of the judgment with costs and accrued interest). (Ibid.) The Supreme Court concluded the settlement after affirmance on appeal indicated that the “judgment was ‘ “the ‘last word’ of the rendering court─a ‘final’ judgment.” ’ ([Sandoval,] at p. 936, italics in original.)” (Id., at p. 911.) The court gave the judgment collateral estoppel effect. (Ibid.) Cheroff makes no argument on appeal that the Sandoval line of cases is inapplicable here.
Here, as in Sandoval and Producers Dairy, the settlement agreement was substantially in the nonappealing party’s favor. (See Sandoval, supra, 140 Cal.App.3d at p. 935; Producers Dairy, supra, 41 Cal.3d at p. 907.) Cheroff’s original position in the probate proceeding was that she owned 50 percent of the Hearst Avenue property in her own right; that the Trust left her 70 percent of its 50 percent share in the Hearst Avenue property; and that she was the trustee of the Trust. Under the probate court’s judgment and postjudgment orders, Cheroff had only a 30 percent interest in the Hearst Avenue property in her own right, she received nothing from the Trust, she was not the trustee, and she was liable for $192,500 in petitioners’ legal fees. Under the settlement agreement, she had a 40 percent interest in the Hearst Avenue property in her own right, she received no part of the Trust’s interest in the property, she shared in the payment of $200,000 in petitioners’ legal fees plus $25,000 to Stephanie, and she was reinstated as trustee. Overall, the settlement only marginally improved the outcome for Cheroff as compared to the probate court judgment.
Other factors of certainty and finality are satisfied regarding the judgment. (See Sandoval, supra, 140 Cal.App.3d at p. 936; Producers Dairy, supra, 41 Cal.3d at p. 911.) The parties to the probate proceeding were fully heard in the probate litigation. Cheroff had the opportunity to raise objections to the proposed statement of decision and did so. The court considered Cheroff’s objections and nevertheless adopted the findings at issue in this appeal in a formal statement of decision. A judgment was then entered. Although the probate court subsequently vacated the judgment, it was urged to do so not because the findings on which the judgment were based were incorrect or unsupported by the evidence, but because specific orders incorporated into the judgment (specifically, that Cheroff be removed as trustee and not sell the Hearst Avenue property) were inconsistent with the parties’ settlement of the action and would impair final resolution of the parties’ dispute. The order vacating the judgment, therefore, does not undermine the certainty and finality of the findings that led to the judgment, which were in the court’s statement of decision and never vacated by the probate court as a result of the settlement.
That the settlement here resulted in an order vacating the judgment, rather than a dismissal of the action with prejudice as in Sandoval, McClain and Producers Dairy, is no bar to application of collateral estoppel. In Stonewall Insurance Co. v. City of Palos Verdes Estates, the court followed Sandoval and Producers Dairy and gave collateral estoppel effect to a judgment that had been vacated following settlement on appeal pursuant to a stipulation of the parties. (Stonewall Insurance Co. v. City of Palos Verdes Estates (1996) 46 Cal.App.4th 1810, 1839-1840.) Moreover, courts may give collateral estoppel effect to a prior court ruling even in the absence of a judgment. (See Border Business Park, Inc. v. City of San Diego (2006) 142 Cal.App.4th 1538, 1561-1566 [order sustaining demurrer given collateral estoppel effect even though no judgment of dismissal was ever filed]; Sabek, Inc. v. Engelhard Corp. (1998) 65 Cal.App.4th 992, 995-996, 998 [order quashing service of process on the ground of lack of personal jurisdiction has collateral estoppel effect even though no judgment ever filed].) Here, the statement of decision─a deliberated, reasoned, final determination of the adjudicated issues in the probate court proceeding─was never vacated. It is sufficiently firm to be given collateral estoppel effect.
Finally, we disagree with Cheroff’s argument that applying collateral estoppel in these circumstances is inconsistent with the policies underlying the doctrine. Cheroff cites cases holding that when the issue is a question of law rather than fact, collateral estoppel will not apply if injustice would result. (Consumers Lobby Against Monopolies v. Public Utilities Com. (1979) 25 Cal.3d 891, 902, disapproved on other grounds by Kowis v. Howard (1992) 3 Cal.4th 888, 896-897, 901; United States Fire Ins. Co. v. Johansen (1969) 270 Cal.App.2d 824, 834-835.) In this appeal, however, Schneider invokes the probate court’s factual findings to collaterally estop Cheroff. In any event, application of collateral estoppel here promotes rather than violates the policies underlying the doctrine, which are “ ‘preservation of the integrity of the judicial system, promotion of judicial economy, and protection of litigants from harassment by vexatious litigation.’ ” (Plumley v. Mockett (2008) 164 Cal.App.4th 1031, 1049.) The probate court has already held an extensive trial and made detailed factual findings about the matters raised in Schneider’s summary judgment motion and postjudgment developments in the probate action do not call the reliability of those findings into question. Giving the probate court’s finding collateral estoppel effect will preserve the integrity of the probate court, promote judicial economy, and protect the participants in the probate proceeding from the need to participate in further litigation.
Under the principles stated in Sandoval, supra, 140 Cal.App.3d at page 936, and affirmed in Producers Dairy, supra, 41 Cal.3d at page 911, the probate court’s findings are properly given collateral estoppel effect.
II. Unclean Hands Defense
Having concluded that the probate court’s findings in its statement of decision are binding on Cheroff in this legal malpractice action, we now consider whether those findings combined with other evidence produced by Schneider establish that Schneider was entitled to judgment as a matter of law. Specifically, does the evidence establish that the doctrine of unclean hands was a complete defense to Cheroff’s legal malpractice cause of action?
The unclean hands doctrine “demands that a plaintiff act fairly in the matter for which he seeks a remedy. He must come into court with clean hands, and keep them clean, or he will be denied relief, regardless of the merits of his claim. [Citations.] The defense is available in legal as well as equitable actions. [Citations.]” (Kendall-Jackson Winery, Ltd. v. Superior Court (1999) 76 Cal.App.4th 970, 978 (Kendall-Jackson).) “The misconduct that brings the unclean hands doctrine into play must relate directly to the cause of action at issue. Past improper conduct or prior misconduct that only indirectly affects the problem before the court does not suffice. The determination of the unclean hands defense cannot be distorted into a proceeding to try the general morals of the parties. [Citation.]” (Id., at p. 979.)
Whether a plaintiff committed misconduct that bars her claim under the doctrine of unclean hands is primarily a question of fact. (Kendall-Jackson, supra, 76 Cal.App.4th at p. 978.) Cheroff argues that the factual findings contained in the probate court’s statement of decision do not support Schneider’s unclean hands defense. She argues that the probate court relied on a statutory presumption to conclude she committed fraud and that Schneider’s professional negligence caused the presumption to arise. We agree that under such circumstances the probate court’s findings of fraud may not bar Cheroff’s malpractice claim. (See Osornio v. Weingarten (2004) 124 Cal.App.4th 304, 329 [holding that plaintiff stated valid claim that attorney committed malpractice by preparing will making a gift presumptively invalid under § 21350, subd. (a) and not advising testator to obtain certification of independent counsel pursuant to § 21351, subd. (b)].) The critical questions on appeal, therefore, are whether the statement of decision includes findings of fraud that are not based solely on a statutory presumption of fraud that arose from Schneider’s own acts or omissions, and if so, whether those findings establish a complete defense of unclean hands as a matter of law.
A. Did the Findings of Misconduct Arise from a Statutory Presumption?
Cheroff’s statutory presumption argument is based on sections 21350 to 21356. As stated earlier, these statutes invalidate gifts to certain transferees unless certain statutory conditions (set forth in section 21351) are met. One such condition is certification by independent counsel that the transfer is not the result of fraud, duress, menace, or undue influence. (§ 21351, subd. (b).) Another condition is a court finding by clear and convincing evidence that the transfer was not the product of fraud, undue influence, or other misconduct. (§ 21351, subd. (d).) Referring to these subdivisions, Cheroff argues that Schneider committed malpractice by not obtaining certification of independent counsel and that his failure to do so invalidated her gifts under the Trust unless she affirmatively proved by clear and convincing evidence that the transfers were not the product of fraud, and undue influence. She argues a finding that she failed to meet this high standard of proof is not a finding on the “same issue” that is raised in this action: whether she actually committed misconduct that would bar her legal malpractice action based on unclean hands.
The probate court ruled that Cheroff was a member of two classes of transferees to whom gifts are invalid unless one of the conditions in section 21351 is met. It made a general finding that none of the conditions in section 21351 was met and specifically found that no certification by independent counsel had been obtained. Importantly, the probate court never referred to a “presumption” or “statutory presumption” in its statement of decision and it never held that Cheroff failed to meet her burden under section 21351, subdivision (d) to prove by clear and convincing evidence that the gift was not the product fraud, menace, duress, or undue influence. Instead, it made affirmative findings of fraud, and undue influence by Cheroff, including the statement: “The Court specifically finds that these purported gifts to Evelyn Cheroff in the Trust and the Amendment to the Trust were the product of fraud and undue influence perpetrated upon Matt Lubin by Evelyn Cheroff . . . .” It also awarded attorneys fees under a provision that required a finding of fraud, menace, duress, or undue influence. (§ 21351, subd. (d).) Although Cheroff objected to the court’s initial statement of decision on the ground that it implied she committed actual rather than constructive fraud and although she specifically challenged the court’s “specific” finding that the gifts to Cheroff were the product of Cheroff’s fraud, and undue influence, the court reaffirmed its decision without any modification.
Cheroff’s objections to the initial statement of decision also attacked the evidentiary foundation for the court’s findings, but the correctness of the court’s rulings are not before us.
Cheroff argues the statement of decision is ambiguous about whether she committed actual fraud, thus raising a factual dispute that precludes summary judgment. Any ambiguity in the court’s general findings of misconduct is dispelled by four specific findings of misconduct included in the statement of decision. First, the court found Cheroff “committed a breach of trust by engaging in self-dealing” by the manner in which she participated in the process of drafting the 1999 Trust, which made a substantial gift to her. Second, it found she committed a breach of trust by engaging in self-dealing by the manner in which she participated in the process of drafting the 2002 amendment to the Trust. Third, it found she breached her fiduciary duty to Lubin as co-owner of the Hearst Avenue property and committed fraud by concealing from Lubin her adverse claim to ownership of 50 percent of that property. Finally, it found she “breached her fiduciary duty to [ ] Lubin as trustee and co-owner of the [Hearst Avenue] property” by asserting her adverse claim of 50 percent ownership immediately upon Lubin’s death. Each of these findings was included in the proposed statement of decision, subjected to challenge by Cheroff, and reaffirmed by the probate court.
Significantly, the court supported these findings by citations to evidence, not to statutory presumptions. For the findings of self-dealing in relation to the drafting of the Trust and 2002 amendment, the court first cited evidence (a 1997 will) of Lubin’s intent not to make a gift of property to Cheroff at a time before his health and mental acuity declined. The court then cited several factors that made Lubin vulnerable to fraud and undue influence in 1999 and 2002: his limited education and literacy; his social isolation; his deteriorating health that included strokes beginning in 1999, a diagnosis of Alzheimer’s disease in 2000, and dementia by 2002; his advanced age (89 in 1999, and 92 in 2002); and his dependence on Cheroff for physical care and financial management of his property by 2002. The court impliedly found that Cheroff and her husband for all intents and purposes controlled the drafting of the Trust and the 2002 Trust amendment: virtually all communications about the documents were between the Cheroffs and Schneider and there was no documentary corroboration that Schneider had ever even met with Lubin or that the Trust provisions were ever fully explained to Lubin. After reciting these facts, the court stated its ultimate finding: Cheroff “has committed a breach of trust by engaging in self-dealing.”
Similarly, the court cited evidence, not a statutory presumption, in support of its findings of misconduct that led to Cheroff’s removal as trustee. The court found that Lubin claimed a 70 percent ownership interest in the Hearst Avenue property during his lifetime and that his claim was supported by documentary evidence. The court found that Cheroff knew of Lubin’s claim to a 70 percent ownership interest and that she did not intend to administer the Trust pursuant to that understanding. Nevertheless, despite her positions as successor trustee nominee and co-owner of the property, she never alerted Lubin during his lifetime to her adverse claim. On these facts, the court concluded she had committed fraud by concealment. The court further found that after Lubin’s death Cheroff asserted her adverse claim to ownership of 50 percent of the Hearst Avenue property and retained 50 percent of the income from the property for her own use. The court concluded this conduct amounted to self-dealing and a breach of fiduciary duty to Lubin.
We conclude the statement of decision makes findings of actual misconduct by Cheroff that are not based on the statutory presumption of section 21350. As the trial court concluded, “[T]he findings in the [statement of decision] extend beyond a finding that the trust transfers were invalid because Plaintiff and her counsel failed to comply with formalities of probate law imposing a presumption of invalidity under the circumstances. (See [ ] §§ 21350[, subd.] (a) and 21351.) Instead, they extend at the very least to findings that Plaintiff abused her fiduciary relationship with Matt Lubin by engaging in self-dealing with the trust assets and by personally persuading him to sign trust documents while he was aged, in failing health and otherwise vulnerable based on his relationship with her. ([statement of decision], pp. 8-11.)”
B. Do the Findings of Misconduct Establish Schneider’s Unclean Hands Defense?
Because the probate court found that Cheroff affirmatively committed misconduct with respect to the drafting of the Trust and 2002 amendment─and that finding is binding against Cheroff under the doctrine of collateral estoppel─Cheroff’s claim against Schneider for negligence in drafting those documents is barred by the doctrine of unclean hands. Cheroff’s own misconduct in the same transaction in which she alleges Schneider committed malpractice bars her from obtaining judicial relief. (See Blain v. Doctor’s Co. (1990) 222 Cal.App.3d 1048, 1052 [under doctrine of unclean hands, plaintiff’s willful perjury bars his malpractice claim against the attorney who advised him to lie at a deposition].)
Even if the probate court had not made affirmative findings of misconduct specifically with respect to the drafting of the Trust and its 2002 amendment, the court’s findings of other misconduct by Cheroff would still bar this action under the doctrine of unclean hands. The other conduct is part of the same general transaction: division of the Hearst Avenue property between Cheroff and the Trust, and among the Trust’s heirs. In the Trust and its amendment, Cheroff obtained 10 percent and 70 percent, respectively, of the Trust’s interest in the property. By committing fraudulent concealment and breach of fiduciary duty, she attempted to increase her individual interest in the property from 30 percent to 50 percent. All of the alleged acts affected Cheroff’s ultimate interest in the Hearst Avenue property upon Lubin’s death. All directly affected the distribution of gifts under the Trust. All took place in the same time period. All were decided in the same probate court proceeding and were resolved in the same settlement agreement. For purposes of applying the unclean hands doctrine, they are all part of the same transaction. “[T]he unclean hands doctrine is not a legal or technical defense to be used as a shield against a particular element of a cause of action. Rather, it is an equitable rationale for refusing a plaintiff relief where principles of fairness dictate that the plaintiff should not recover, regardless of the merits of his claim. . . . Thus, any evidence of a plaintiff’s unclean hands in relation to the transaction before the court or which affects the equitable relations between the litigants in the matter before the court should be available to enable the court to effect a fair result in the litigation.” (Kendall-Jackson, supra, 76 Cal.App.4th at p. 985.)
Cheroff argues the statement of decision does not include findings of intentional misconduct that can support an unclean hands defense, as distinct from what she characterizes as constructive fraud or a “non-intentional breach of fiduciary duty.” Assuming without deciding that only intentional misconduct will support an unclean hands defense, we easily conclude that the probate court found that Cheroff committed intentional misconduct. The court found that Cheroff engaged in self-dealing, willfully concealed information from Lubin during his lifetime, and asserted claims adverse to the Trust after his death, all in breach of her fiduciary duties to him as co-owner of his property, successor trustee nominee, and finally trustee of the Trust. This is not a pattern of behavior that could reasonably be characterized as non-intentional. That the misconduct arose from her breach of heightened duties she owed to Lubin in her roles as property manager and trustee does not render her misconduct nonwillful. There is no indication in the statement of decision that Cheroff was unaware of her fiduciary relationship with Lubin or was unaware that her acts conflicted with his interests. As the trial court below ruled: “Even to the extent such conduct constitutes only breach of fiduciary duty and constructive fraud, rather than actual fraud, it involves a sufficient amount of conscious wrongdoing to warrant application of the unclean hands doctrine under the circumstances. [Citation.]” Her willful misconduct satisfies the unclean hands doctrine: “Any conduct that violates conscience, or good faith, or other equitable standards of conduct is sufficient cause to invoke the doctrine. [Citations.]” (Kendall-Jackson, supra, 76 Cal.App.4th at p. 979.)
In her reply brief, Cheroff argues for the first time that the probate court’s findings had no effect on her pretrial renouncement of her gifts under the 2002 Trust amendment and therefore cannot bar her claim that Schneider’s legal malpractice caused her to renounce those gifts. The argument is not timely raised. (REO Broadcasting Consultants v. Martin (1999) 69 Cal.App.4th 489, 500 [refusing to entertain an argument raised for the first time in a reply brief].) Nor does it have merit. The probate court specifically found that Cheroff committed misconduct with respect to the drafting of the 2002 Trust amendment by engaging in self-dealing in breach of her fiduciary duty to Lubin. That finding of misconduct bars her claim against Schneider for legal malpractice in the same transaction.
Finally, Cheroff argues that the record on appeal is inadequate to establish that the issues Schneider seeks to give preclusive effect were necessarily decided in the probate court action. In contrast to the cases cited by Cheroff, the probate court’s findings are expressly set forth in a statement of decision, obviating the need for a greater examination of the probate court trial record. (See, e.g., Goodman v. Dam (1931) 112 Cal.App. 244, 246 [reporter’s transcript of prior action examined to determine what issues were necessarily decided in rendering the judgment that was reflected in the judgment roll].)
As a matter of law, the probate court’s findings of affirmative misconduct by Cheroff in matters related to the disposition of Lubin’s interest in the Hearst Avenue property, which are binding against her in this action under the doctrine of collateral estoppel, establish a complete defense of unclean hands with respect to her claim against Schneider for legal malpractice in the same transaction.
Disposition
The order granting summary judgment and the judgment are affirmed. Evelyn Cheroff shall pay Eugene Schneider’s costs on appeal.
We concur: JONES, P. J., SIMONS, J.