Opinion
G057625
11-16-2020
IRMA ESTHER CORTEZ et al., Plaintiffs and Respondents, v. VERONICA OROZCO, Defendant and Appellant.
Gostanian Law Group, Amy L. Gostanian and Michelle C. Bartolic for Defendant and Appellant. Bunt & Shaver and David N. Shaver for Plaintiffs 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. 30-2017-00905815) OPINION Appeal from a judgment of the Superior Court of Orange County, David L. Belz, Judge. Affirmed. Gostanian Law Group, Amy L. Gostanian and Michelle C. Bartolic for Defendant and Appellant. Bunt & Shaver and David N. Shaver for Plaintiffs and Respondents.
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Defendant Veronica Orozco appeals from the court's judgment finding certain restatements of her father's trust were the product of her undue influence. Under the original trust, the trust assets were divided between Veronica's daughter, Alondra Orozco, and Veronica's three sisters, plaintiffs Irma Esther Cortez, Guadalupe Romero, and Maria Isabel Romero. The final restatement of the trust disinherited Veronica's three sisters and provided all of the trust assets would go to Veronica's daughter. At trial, certain testimony suggested Veronica's share went to her daughter to protect Veronica's receipt of government benefits and that Alondra would hold the assets for Veronica.
Because the relevant parties to this appeal share the same last names, we refer to them by first name to avoid confusion. No disrespect is intended.
On appeal, Veronica argues the court erred by applying a presumption that the restatements were the product of her undue influence because she was not a direct beneficiary under any of the restatements. She also argues her father's attorney prepared a certificate of independent review thereby rebutting any presumption of undue influence. Finally, she claims the court applied the wrong standard of proof. We disagree with all of her contentions. Collectively, the evidence supported the court's finding that the restatements were the product of Veronica's undue influence. We accordingly affirm the judgment.
FACTS
Eutimio Romero and his wife, Isabel Romero, had four children, Irma, Guadalupe, Maria, and Veronica. In 2014, Eutimio and Isabel created a living trust (the Trust). Upon the death of the surviving trustor, the Trust provided that the Trust assets would be divided equally among Irma, Guadalupe, Maria, and Eutimio's granddaughter who was Veronica's daughter, Alondra. At trial, the attorney who drafted the Trust testified Veronica's share of the Trust assets went to Alondra to protect Veronica's receipt of certain government benefits that might have been compromised if she had received an inheritance. According to the attorney, Eutimio and Isabel trusted Alondra to hold the assets for Veronica.
In 2015, Isabel passed away, and Eutimio moved in with Veronica. Around two months later, Eutimio executed a first restatement of the Trust. Under the first restatement, Eutimio disinherited Irma, Maria, and Veronica. In February 2016, Eutimio executed a second restatement of the Trust disinheriting Guadalupe and some of Eutimio's grandchildren. In September 2016, Eutimio executed a third restatement of the Trust. Under the third restatement, Eutimio left all of the Trust assets to Alondra.
Remarkably, the record on appeal does not include the Trust or any of the restatements. We accordingly summarize the facts available from the reporter's transcript.
The attorney who drafted the three restatements recommended Eutimio obtain a certificate of independent review from another attorney "to protect [Eutimio's] interest." At trial, the attorney testified a certificate of independent review is "a document that's prepared by a third party attorney who meets with the trustor, reviews the terms of the trust, and confirms the wishes of the trustor and then prepares and signs a certificate of independent review." Eutimio ultimately obtained the certificate from another attorney. The certificate is not included in the record on appeal, but according to certain trial testimony, the certificate stated "the transfers to Alondra Orozco Romero . . . that would be made by the instrument are not the product of fraud, undue influence, or duress." Another certificate stated "the transfers to Veronica Orozco Romero [who would be the contingent beneficiary if Alondra passed] that would be made by the instrument are not the product of fraud, undue influence, or duress."
Eutimio passed away in November 2016, about two months after the third restatement of the Trust. In February 2017, Irma, Guadalupe, and Maria filed a petition alleging the three restatements were the product of Veronica's undue influence and seeking to remove her as trustee.
At trial, witnesses suggested Veronica received certain government benefits that could have been compromised if she directly received an inheritance so her share of the Trust assets went to Alondra under the various restatements. Other testimony established Veronica attended various meetings with the attorneys who drafted the restatements.
In their briefs, the parties detail additional facts regarding Eutimio's mental capacity, Veronica's confidential relationship with her father, and her participation in procuring the restatements. We do not summarize all of those facts because Veronica does not challenge those portions of the court's judgment.
In February 2019, the court issued a judgment and explained it previously rendered a statement of decision whereby "the Court considered the totality of the circumstances and found a presumption of undue influence by a preponderance of the evidence based on a[n] affirmative showing that Veronica had a confidential relationship with her father; that Veronica actively participated in procuring the instruments involved; [and] that Veronica benefitted unduly by the testamentary documents." According to the court, "Veronica failed to provide sufficient evidence to rebut the presumption of undue influence."
The court further explained: "The evidence in this case overcomes the presumption of validity for all three Restatements of the Survivors Trust. The Court finds that the three Restatements . . . are the result of undue influence as defined in Welfare and Institutions Code 15610.70 and therefore all three restatements are deemed to be invalid and unenforceable. The Court further finds that the evidence supports a finding that Eutimio Romero was vulnerable to undue influence due to his age, due to his being isolated from other family members shortly after [his wife's] death, and due to his lack of education and inability to read or write English or Spanish. The Court finds that Veronica exercised apparent authority over Eutimio as a family member, as a care provider by providing Eutimio with companionship and affection. The Court finds that Veronica controlled the interactions of Eutimio with other family members. As a result, Eutimio was persuaded to change his estate planning documents by disinheriting his daughters Irma, Isabel, and Guadalupe . . . . The Court finds that the undue influence began shortly after the death of Eutimio's wife and continued up to the time of his death. The Court further finds there was inequity in the result because Eutimio disinherited his three daughters by and through the restatement of the trust." Finally, the court removed Veronica as trustee of the Trust and appointed Irma as the successor trustee.
DISCUSSION
Veronica contends the court erred by applying a presumption of undue influence because she was not a beneficiary under the three restatements of the Trust. She also argues the certificate of independent review prepared by Eutimio's attorney rebutted any presumption of undue influence. Finally, she claims the court applied the wrong standard of proof. For the reasons below, we disagree and affirm the judgment.
Applicable Law and Standard of Review
"As a general proposition, California law allows a testator to dispose of property as he or she sees fit without regard to whether the dispositions specified are appropriate or fair." (Estate of Sarabia (1990) 221 Cal.App.3d 599, 604.) However, "[t]his presumption can be overcome if it is shown that the testator was affected by undue influence, a concept with a very definite meaning." (Ibid.) "Undue influence is pressure brought to bear directly on the testamentary act, sufficient to overcome the testator's free will, amounting in effect to coercion destroying the testator's free agency." (Rice v. Clark (2002) 28 Cal.4th 89, 96.)
"Although a person challenging the testamentary instrument ordinarily bears the burden of proving undue influence [citation], [the California Supreme Court] and the Courts of Appeal have held that a presumption of undue influence, shifting the burden of proof, arises upon the challenger's showing that (1) the person alleged to have exerted undue influence had a confidential relationship with the testator; (2) the person actively participated in procuring the instrument's preparation or execution; and (3) the person would benefit unduly by the testamentary instrument." (Rice v. Clark, supra, 28 Cal.4th at pp. 96-97; see Bernard v. Foley (2006) 39 Cal.4th 794, 800.) When this presumption arises, the burden shifts to the proponent of the testamentary instrument to show it was not the product of undue influence. (Estate of Baker (1982) 131 Cal.App.3d 471, 483.)
Contrary to Veronica's argument that we review de novo whether the presumption applies in this case, whether a presumption of undue influence applies is a question of fact reviewed for substantial evidence. (Estate of Sarabia, supra, 221 Cal.App.3d at p. 605.) In reviewing a challenge to the sufficiency of the evidence, "[w]e presume the evidence supports every finding of fact unless appellant demonstrates otherwise, and we must draw all reasonable inferences from the record to support the judgment." (El Escorial Owners' Assn. v. DLC Plastering, Inc. (2007) 154 Cal.App.4th 1337, 1357.) Thus, "we are bound by the familiar principle that 'the power of the appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted,' to support the findings below." (Oregel v. American Isuzu Motors, Inc. (2001) 90 Cal.App.4th 1094, 1100.) Veronica unduly benefitted from the Trust restatements.
Because Veronica does not contest there was a confidential relationship between her and Eutimio or that she actively participated in procuring the restatements, we address only the third prong required for a presumption of undue influence to arise. With respect to the third prong, i.e., whether Veronica unduly benefitted from the restatements, "[t]he determination of this issue is based on a qualitative assessment of the evidence, not a quantitative one." (Conservatorship of Davidson (2003) 113 Cal.App.4th 1035, 1060, disapproved on other grounds as stated in Bernard v. Foley (2006) 39 Cal.4th 794, 810-811.) The issue is not whether the beneficiary profited from the decedent's disposition of her estate; it is whether the profit was "'undue.'" (Conservatorship of Davidson, at p. 1060.) A person "unduly benefit[s]" when he receives a bequest that is "'unwarranted, excessive, inappropriate, unjustifiable or improper.'" (Estate of Auen (1994) 30 Cal.App.4th 300, 311.) "The trier of fact derives from the evidence introduced an appreciation of the respective relative standings of the beneficiary and the contestant to the decedent in order that the trier of fact can determine which party would be the more obvious object of the decedent's testamentary disposition." (Estate of Sarabia, supra, 221 Cal.App.3d at p. 607.)
Veronica contends she did not unduly benefit from the restatements because she was not a direct beneficiary who received a personal gain. But "[a]n undue benefit can be shown by benefit to the person in the confidential relationship or by benefit to another person." (Estate of Auen, supra, 30 Cal.App.4th at p. 312.) Here, there was substantial evidence of undue benefit to Veronica given that Eutimio left his entire estate to Veronica's daughter, Alondra. The evidence suggested Veronica's share went to Alondra only to avoid any changes to Veronica's receipt of certain government benefits. Other evidence suggested Alondra would hold the assets for Veronica. Veronica accordingly still benefitted unduly by having her daughter designated as the sole beneficiary of Eutimio's assets even if she did not personally receive the estate. The certificate of independent review does not rebut the common law presumption of undue influence.
Relying on Probate Code section 21384, Veronica claims the certificate of independent review prepared by Eutimio's attorney rebutted any presumption of undue influence. Section 21384, subdivision (a) provides: "A donative transfer is not subject to [the presumption of undue influence under] Section 21380 if the instrument is reviewed by an independent attorney who counsels the transferor, out of the presence of any heir or proposed beneficiary, about the nature and consequences of the intended transfer, including the effect of the intended transfer on the transferor's heirs and on any beneficiary of a prior donative instruments, attempts to determine if the intended transfer is the result of fraud or undue influence, and signs and delivers to the transferor [a certificate of independent review]." (Italics added.) The presumption of undue influence under section 21380 only applies to donative transfers made to the following individuals: "(1) The person who drafted the instrument. [¶] (2) A person who transcribed the instrument or caused it to be transcribed and who was in a fiduciary relationship with the transferor when the instrument was transcribed. [¶] (3) A care custodian of a transferor who is a dependent adult [under certain circumstances]. [¶] (4) A care custodian who commenced a marriage, cohabitation, or domestic partnership with a transferor [under certain circumstances]. [¶] (5) A person who is related by blood or affinity, within the third degree, to any person described in paragraphs (1) to (3), inclusive. [¶] (6) A cohabitant or employee of any person described in paragraphs (1) to (3), inclusive. [¶] (7) A partner, shareholder, or employee of a law firm in which a person described in paragraph (1) or (2) has an ownership interest."
All further statutory references are to the Probate Code. --------
Here, Veronica and Alondra do not fit within the prohibited categories of persons under section 21380 so the presumption of undue influence under that statute does not apply. Accordingly, because a certificate of independent review under section 21384 rebuts only the statutory presumption of undue influence under section 21380, the certificate does not rebut the common law presumption, which the court correctly applied here. Although the two presumptions have some overlap they are not congruent. The application of the section 21380 presumption does not require proof of undue benefit to the transferee. But as discussed above, the common law presumption, which the court applied here, does require proof of an undue benefit, and the court found Veronica had in fact been unduly benefitted. Thus, a certificate prepared under section 21384 would not have encompassed the undue benefit prong of the common law presumption. The court applied the correct standard of proof.
Finally, Veronica argues the court applied the wrong standard of proof. She contends her sisters had the burden of proving undue influence by clear and convincing evidence but the court incorrectly applied a preponderance of the evidence standard. Her argument has no legal support. A party asserting undue influence must prove the common law presumption by a preponderance of the evidence. (Estate of Clegg (1978) 87 Cal.App.3d 594, 602; Estate of Gelonese (1974) 36 Cal.App.3d 854, 863-864.) "'The effect of a presumption affecting the burden of proof is to impose upon the party against whom it operates the burden of proof as to the nonexistence of the presumed fact.' [Citation.] Accordingly, when the contestant has shown by a preponderance of the evidence that the proponent of a [testamentary transfer] sustained a confidential relationship toward the testator, actively participated in procuring the execution of the [testamentary instrument], and unduly profited thereby, a presumption of undue influence, i.e., the presumed fact, arises, and the burden then shifts to the proponent to prove that the [testamentary instrument] was not induced by his undue influence. [Citations.] This burden requires that the proponent produce proof by a preponderance of the evidence that the [testamentary instrument] was not induced by his undue influence." (Estate of Gelonese, at p. 863, italics added.) The court accordingly did not err by applying a preponderance of the evidence standard to determine if Irma, Guadalupe, and Maria had met their burden.
DISPOSITION
The judgment is affirmed. Irma, Guadalupe, and Maria shall recover their costs incurred on appeal.
IKOLA, J. WE CONCUR: ARONSON, ACTING P. J. THOMPSON, J.