Opinion
NOT TO BE PUBLISHED
Santa Clara County Super. Ct. No. PR160369.
Mihara, Acting P. J.
During a 40-year marriage, the husband transferred community property stocks and bonds into a trust without the written consent of the wife. The trust instrument provided that most of the income from the trust would go to the wife after the husband’s death if he predeceased her, but the trust assets would go to certain charities after the wife’s death. The husband died in 1987, and the wife died in 2006. After the wife’s death, one of her heirs filed a petition seeking to invalidate, under Probate Code section 5020, the trust provision for the nonprobate transfer of these assets upon the wife’s death. The charities filed a demurrer contending that it was too late to make such a challenge. The superior court sustained the demurrer without leave to amend, and the wife’s heir appeals. We conclude that the heir’s cause of action did not accrue until the wife’s death, so the petition was not untimely.
I. Factual Background
George Winthrop Cable and Alice May Cable married in 1947 and remained married until George died in 1987. The marriage did not produce children, but George had a son by a previous marriage. George’s son had three children: appellant Robert Cable and his two sisters. George’s son died prior to 1978.
“Hereafter, we refer to the parties by their first names, as a convenience to the reader. We do not intend this informality to reflect a lack of respect.” (In re Marriage of Balcof (2006) 141 Cal.App.4th 1509, 1513, fn. 2.)
George executed a living trust agreement in September 1978, and he transferred an extensive collection of stocks and bonds into the trust at that time. The trust agreement provided that the trust income would be paid to George during his lifetime. If Alice survived him, 75 percent of the trust income would be paid to her during her lifetime, and the other 25 percent of the trust income would be reinvested. Upon Alice’s death, the trustee was directed to hold the trust principal and all income until January 15, 1995 and then divide the principal and income into equal shares for George’s grandchildren.
On the same day he executed the trust agreement, George also executed a will. In his will, George “confirm[ed] to [Alice] her interest in our community property.” The will provided that most of his personal items would go to Alice. A few items were individually devised to George’s grandchildren. The remainder of his estate was to be placed in his trust.
In November 1984, George amended the trust agreement. He cancelled the provisions for after Alice’s death and set forth new provisions for after Alice’s death. The amended trust agreement provided that the trustee would liquidate all trust assets upon Alice’s death and distribute $50,000 to each of George’s three grandchildren. The remainder of George’s trust assets would be distributed 50 percent to the United Methodist Church of Vista, 25 percent to Shriners’ Hospital for Crippled Children, and 25 percent to the Salvation Army. In March 1985, George amended the trust agreement a second time, but he did not change these provisions.
George died on July 13, 1987. His estate consisted entirely of his separate property. The residue of his estate was placed in the trust.
In September 1991, Alice executed a will in which she devised “20% of the residue of my estate” to each of George’s three grandchildren. The remainder of the residue of Alice’s estate was to go to her brother. In August 1996, Alice executed a codicil to her will which revoked one paragraph of her will and replaced it with another, added a “specific gift” of 20 percent of the residue of her estate to the Salvation Army, and confirmed and republished her will in all other respects. Alice died on September 3, 2006. Her will and codicil were thereafter admitted to probate.
II. Procedural Background
On June 29, 2007, Robert filed a “PETITION FOR RECOVERY AND RETURN OF COMMUNITY PROPERTY” under Probate Code section 850. Robert alleged that he is a devisee under Alice’s will. He also alleged that the property transferred by George into the trust in 1978 had been community property of George and Alice. Robert alleged that the 1978 transfer had been “made without valuable consideration” and “without the written consent” of Alice. Robert contended that this transfer was ineffective as to Alice’s community property interest in that property under Probate Code section 5020. He prayed for an order directing the trustee of George’s trust to transfer Alice’s share of the community property to Alice’s estate.
Robert was originally appointed executor of Alice’s estate, but he was removed from that position by the court.
Respondents Shriners Hospitals for Children (Shriners) and the Salvation Army (SA) demurred to Robert’s petition on the ground that Robert lacked standing, and respondent Vista United Methodist Church (VUMC) joined in their demurrer. The trustee of George’s trust also joined in the demurrer. They sought judicial notice of Alice’s August 1996 codicil and of the probate court order admitting Alice’s will and codicil to probate. Respondents also sought judicial notice of various pleadings filed by Robert and his sisters in a civil action in the superior court, responses to those pleadings, and a court order regarding those pleadings. Robert opposed the request for judicial notice. Respondents subsequently sought judicial notice of the notice of George’s death and of documentation of the probate of George’s estate.
Alice’s will had been attached to Robert’s petition, but her codicil had not been attached.
The court overruled the demurrer. It granted judicial notice of the existence of Alice’s will and her 1996 codicil, and of the order of probate of Alice’s will and codicil, but it denied judicial notice of the other documents.
In December 2007, a stipulated judgment was entered in the probate action regarding Alice’s estate. Under this judgment, Robert and his two sisters were found to be entitled to collectively inherit 40 percent of the residue of Alice’s estate.
In January 2008, Shriners and SA filed a response to Robert’s petition. Their response asserted that the claim made in the petition was time-barred because (1) Robert had failed to file a creditor’s claim in the probate of George’s will, (2) Robert’s claim was essentially a conversion cause of action, which was barred by the three-year statute of limitations, (3) Alice had failed to file the claim within one year after George’s 1987 death, as they claimed was required under Code of Civil Procedure section 366.2, and (4) Probate Code section 5020 was “not applicable, ” and any action under that statute was barred by the statute of limitations.
In February 2008, Shriners and SA filed a motion for judgment on the pleadings, and VUMC joined their motion. Their motion repeated the contentions they had made in their response to the petition. They contended that the claims in the petition were time-barred due to the absence of a creditor’s claim against George’s estate or due to the expiration of the limitations period for a conversion action in either 1982 (three years after the transfer) or 1988 (one year after George’s death). Shriners and SA again requested judicial notice of various pleadings filed in a civil action brought by Robert and his sisters and of documents regarding the probate of George’s will.
The court granted judicial notice of the documents regarding the probate of George’s will but denied judicial notice of the pleadings in the civil action. The court found that the petition was time-barred, and it granted the motion for judgment on the pleading, but it granted Robert leave to amend.
In May 2008, Robert filed an amended petition. His substantive allegations remained the same. He prayed for “determination[s]” that (1) the 1978 transfer was “ineffective and void” as to Alice’s interest in the community property, (2) the amendment of George’s trust was “ineffective and void” as to Alice’s interest in the community property, (3) the trust assets are community property of George and Alice, (4) Alice never gave written consent to the transfer or to the amendment of the trust, and (5) the transfer and amendments to the trust did not affect Alice’s right to dispose of her interest in the community property upon her death. He also prayed for an order requiring the trustee of George’s trust to account for Alice’s share of the community property in the trust and to deliver Alice’s share to Alice’s estate.
Shriners and SA demurred to the amended petition on the ground that the amended petition was time-barred. They repeated the same arguments that they had previously made in their motion for judgment on the pleadings. VUMC joined in their demurrer.
In August 2008, the court sustained the demurrer to the amended petition without leave to amend on the ground that Robert’s claims “are time barred.” Robert filed a timely notice of appeal.
III. Discussion
“ ‘We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed.’ [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] When a demurrer is sustained, we determine whether the complaint states facts sufficient to constitute a cause of action. [Citation.] And when it is sustained without leave to amend, we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse; if not, there has been no abuse of discretion and we affirm. [Citations.] The burden of proving such reasonable possibility is squarely on the plaintiff.” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
We must treat the demurrer as admitting the allegations of the petition that the property transferred to the trust by George in 1978 was community property of George and Alice, and Alice did not consent in writing to this transfer or to any other transfer of these assets. The sole basis for the demurrer was the timeliness of Robert’s petition. Robert contends that his 2007 petition was not untimely because he made a timely challenge to the provision for a nonprobate transfer of community property upon Alice’s death under Probate Code sections 5020 and 5021. Respondents maintain that Robert’s petition was an untimely challenge to George’s 1978 transfer of the property into the trust.
Robert filed his petition under Probate Code section 850. This statute permits an interested person to file a petition “requesting that the court make an order” where, among other things, either “the decedent died having a claim to real or personal property, title to or possession of which is held by another” (Prob. Code, § 850, subd. (a)(2)(D)) or “the trustee is in possession of, or holds title to, real or personal property, and the property, or some interest, is claimed to belong to another” (Prob. Code, § 850, subd. (a)(3)(A)). An “ ‘interested person’ ” includes “[a]n heir, devisee, child, spouse, creditor, beneficiary, and any other person having a property right in or claim against a trust estate or the estate of a decedent which may be affected by the proceeding.” (Prob. Code, § 48, subd. (a).)
Robert asserts that his petition was authorized by Probate Code section 850, subdivision (a)(2)(D) because he is pursuing Alice’s claim to property held by the trustee of George’s trust. We believe Robert’s petition is authorized by Probate Code section 850, subdivision (a)(3)(A) because he sought an order directing the trustee of George’s trust to transfer one-half of the community property in George’s trust to Alice’s estate. Hence, his claim was that the trustee possessed property that belonged to Alice’s heirs. In either case, Probate Code section 850 authorized Robert to file his petition.
The substantive basis for Robert’s claim is Probate Code section 5020. “A provision for a nonprobate transfer of community property on death executed by a married person without the written consent of the person’s spouse (1) is not effective as to the nonconsenting spouse’s interest in the property and (2) does not affect the nonconsenting spouse’s disposition on death of the nonconsenting spouse’s interest in the community property by will, intestate succession, or nonprobate transfer.” (Prob. Code, § 5020, italics added.) Robert does not simply challenge the 1978 transfer of Alice’s share of the community property into the trust; he contests the validity of George’s provision for the nonprobate transfer of that property upon Alice’s death.
Robert’s challenge to a provision of George’s trust under Probate Code section 5020 is not precluded by the fact that Probate Code section 5020 was enacted after George’s death. Probate Code section 5014 provides: “[T]his chapter [which includes Probate Code section 5020] applies to a provision for a nonprobate transfer of community property on the death of a married person, regardless of whether the provision for transfer of the property was executed by the person... before, on, or after January 1, 1993.” (Prob. Code, § 5014, subd. (a); Stats. 1992, ch. 51, § 6.) The provision that Robert challenges is a provision for the nonprobate transfer of Alice’s community property upon her death. Thus, the time of the execution of this provision does not affect whether it was invalidated by Probate Code section 5020.
Probate Code section 5020 was enacted in 1992 as part of a new chapter of the Probate Code that also contained Probate Code sections 5014 and 5021. (Stats. 1992, ch. 51, § 6.)
While title to Alice’s share of the community property has been held by the trust since 1978, Robert’s action does not simply seek recovery of Alice’s share of the community property. Robert seeks to invalidate George’s provision for the nonprobate transfer of that property to third parties upon Alice’s death. The Probate Code explicitly provides that such “a provision” is “ineffective” and authorizes proceedings to set aside the transfer that such a provision directs to be made. Probate Code section 5021 provides: “In a proceeding to set aside a nonprobate transfer of community property on death made pursuant to a provision for transfer of the property executed by a married person without the written consent of the person’s spouse, the court shall set aside the transfer as to the nonconsenting spouse’s interest in the property, subject to terms and conditions or other remedies that appear equitable under the circumstances of the case, taking into account the rights of all interested persons.” (Prob. Code, § 5021, subd. (a), italics added; Stats. 1992, ch. 51, § 6.)
These Probate Code provisions are directed at a different act than the related Family Code provisions (Fam. Code, §§ 1100, 1101). The Family Code provisions prohibit the taking of community property by one spouse from the other spouse without the other spouse’s consent and provide a mechanism for the other spouse to regain that property. The Probate Code provisions proscribe a nonprobate transfer upon death of community property by one spouse without the other spouse’s consent and provide a mechanism for the other spouse’s heirs to invalidate that transfer.
These Family Code provisions are described in footnote 7.
The key to determining whether Robert’s petition was timely is deciding when his cause of action accrued. “ ‘Generally, a cause of action accrues and the statute of limitation begins to run when a suit may be maintained.... “Ordinarily this is when the wrongful act is done and the obligation or the liability arises, but it does not ‘accrue until the party owning it is entitled to begin and prosecute an action thereon.’ ”... In other words, “[a] cause of action accrues ‘upon the occurrence of the last element essential to the cause of action.’ ” [Citations.]’ ” (Howard Jarvis Taxpayers Assn. v. City of La Habra (2001) 25 Cal.4th 809, 815.)
Robert contends that his action did not accrue until George’s trustee refused to transfer the property to Alice’s estate. Since Alice could have consented to the provision for the nonprobate transfer of the property upon her death at any time before she died, Robert’s cause of action to invalidate that provision clearly could not have arisen until Alice’s death. At no earlier time could he have prosecuted an action based on a nonconsensual provision for the nonprobate transfer of the property upon Alice’s death. Respondents do not contend that the applicable limitations period was less than one year. Since Alice died in September 2006, and Robert filed his petition in June 2007, his petition was not barred by any potentially applicable statute of limitations.
Respondents argue at length that the statutes of limitations in the Code of Civil Procedure apply to claims brought under Probate Code section 5020. Robert contends that there is no applicable limitations period for his action. It is not necessary for us to directly resolve this dispute as the resolution of the accrual issue precludes any potentially applicable statute of limitations from barring Robert’s action.
Respondents rely on Parker v. Walker (1992) 5 Cal.App.4th 1173 (Parker), which they characterize as “similar” to this case. In the 1960s, Crosley and Walker won a judgment against a third party, and the judgment proceeds were placed in a trust account in both of their names. Crosley and Walker could not agree on the division of these proceeds, so the money remained in the trust account. Crosley died in 1967, and his widow, who inherited his estate, died in 1971. In the late 1980s, his widow’s heirs filed a probate petition in which they alleged that they were entitled to half of the proceeds of the trust account. Walker responded by asserting that he was entitled to the entire amount based on an oral agreement between him and Crosley. The court ruled for Walker. The heirs appealed and contended that Walker’s claim was untimely. (Parker, at pp. 1177-1182.)
The Court of Appeal began its analysis by concluding that the judgment proceeds were presumptively owned equally by the two men. (Parker, supra, 5 Cal.App.4th at pp. 1182-1183.) Hence, Crosley and his heirs had held title to half of the trust account since the 1960s. The court then concluded that a probate petition was an “action” subject to Code of Civil Procedure statutes of limitations. (Parker, at pp. 1183-1189.) Since Walker had failed to initiate any action claiming entitlement to the entire proceeds within the two-year limitations period for an action on an oral agreement, though Crosley and his heirs had held title to half of those proceeds since the 1960s, Walker’s claim in the probate proceedings was untimely. (Parker, at pp. 1189-1190.)
We do not find Parker to be “similar” to the case before us. In Parker, Walker attacked the right of Crosley and his heirs to hold title to half of the judgment proceeds, proceeds that they had held since the 1960s. His cause of action accrued when Crosley took title to half of those proceeds decades before Walker initiated his claim. Here, on the other hand, Robert attacks only the validity of a provision for the nonprobate transfer of the property to third parties upon Alice’s death, a provision which could not take effect until Alice’s death, which was less than one year prior to Robert’s initiation of his claim. Walker’s cause of action had clearly accrued in the 1960s, but Robert’s cause of action could not accrue until Alice’s death. Since Robert initiated his action within one year of Alice’s death, it was not untimely. Any earlier action would have been premature, as Alice could have validated this provision at any time during her lifetime by consenting to it.
Robert contends that the timeliness provisions of Family Code section 1101 are applicable here, at least by analogy, and respondents contest this contention. We need not consider whether, after Alice’s death, a Probate Code section 850 petition by Robert would have been timely if it sought to raise Alice’s claim under Family Code section 1100 that the 1978 transfer was invalid as to her share of the community property. Here, the focus of Robert’s claim under Probate Code section 5020 is not on the validity of the 1978 transfer but on the validity of the provision for the nonprobate transfer of the property upon Alice’s death. The 1978 transfer was effective no later than George’s 1987 death, while the provision for the nonprobate transfer upon Alice’s death was effective no earlier than Alice’s 2006 death. A cause of action cannot be untimely before it has accrued.
In 1978, at the time of George’s transfer of assets to the trust, former Civil Code section 5125 provided: “A spouse may not make a gift of community personal property, or dispose of community personal property without a valuable consideration, without the written consent of the other spouse.” (Stats. 1977, ch. 692, § 1.) In 1986, the Legislature enacted former Civil Code section 5125.1, which provided a remedy for a violation of former Civil Code section 5125. (Stats. 1986, ch. 1091, § 2.) When the Family Code was enacted in 1992, the content of former Civil Code section 5125 was enacted as Family Code section 1100 and the content of former Civil Code section 5125.1 was enacted as Family Code section 1101. (Fam. Code, § 1100, subd. (b); Stats. 1992, ch. 162.) Family Code section 1100 provides: “A spouse may not make a gift of community personal property, or dispose of community personal property for less than fair and reasonable value, without the written consent of the other spouse.” (Fam. Code, § 1100, subd. (b).)
Family Code section 1101 applies only to a spouse’s “claim against the other spouse.” (Fam. Code, § 1101, subd. (a), italics added.) While Probate Code section 850 would permit an interested party to pursue a deceased spouse’s claim against the other spouse, Robert has not undertaken a claim against George, but a claim against the trustee of George’s trust. We express no opinion on whether such an action could succeed under Family Code sections 1100 and 1101.
Respondents insist that “the essence of [Robert’s] claim is that George committed conversion when he purportedly transferred Alice’s share of the community property into the Trust without her knowledge or consent.” (Underscore omitted.) They urge that “Alice’s claim for conversion accrued in 1978” when George transferred the property to the trust. However, Robert does not seek to invalidate the 1978 transfer in this action; he challenges George’s provision for a subsequent nonprobate transfer of this property upon Alice’s death. It is evident that such a provision does not create a conversion until the transfer it directs occurs.
Respondents argue that Robert’s claim is untimely because Alice was required to assert this claim when George’s estate was probated in 1988. The property in question was not part of George’s estate, as it had been transferred previously to the trust. It is difficult to see what steps could have been taken in the probating of George’s estate to recover property that was not in his estate because he had transferred it to his trust, particularly if Alice was unaware of the transfer, which we must assume on demurrer.
Respondents maintain that Robert may not assert this claim now because he failed to assert it against George’s estate within one year of George’s death. George could not have been liable to Robert (or Alice) based on the provision for a nonprobate transfer of the property upon Alice’s death at the time of George’s death. It is true that this provision became irrevocable at that time, but it was wholly executory and therefore could not have formed the basis for George being held liable at that time.
Respondents also contend that Robert’s claim was barred by laches. “It is well established that mere lapse of time without showing of prejudice to the defendant does not constitute laches.” (Jones v. H.F. Ahmanson & Co. (1969) 1 Cal.3d 93, 120.) “Laches may be raised by demurrer, but only if the complaint shows on its face unreasonable delay plus prejudice or acquiescence.” (Conti v. Board of Civil Service Commissioners (1969) 1 Cal.3d 351, 362; see also Barndt v. County of Los Angeles (1989) 211 Cal.App.3d 397, 403.) Robert’s amended petition did not show “on its face” prejudice or acquiescence. Hence, respondents’ demurrer could not be sustained based on laches.
As Robert’s cause of action under Probate Code sections 5020 and 5021 did not accrue until Alice’s death, his petition, filed less than a year after her death, was not barred by any potentially applicable statute of limitations.
IV. Disposition
The judgment is reversed, and the matter is remanded to the superior court with directions to vacate the order sustaining the demurrer to the amended petition and to enter a new order overruling the demurrer. Robert shall recover his costs on appeal.
WE CONCUR: McAdams, J., Duffy, J.
Family Code section 1101 provides, and former Civil Code section 5125.1 provided: “(a) A spouse has a claim against the other spouse for any breach of the fiduciary duty that results in impairment to the claimant spouse’s present undivided one-half interest in the community estate, including, but not limited to, a single transaction or a pattern or series of transactions, which transaction or transactions have caused or will cause a detrimental impact to the claimant spouse’s undivided one-half interest in the community estate.” (Fam. Code, § 1101, subd. (a); Stats. 1986, ch. 1091, § 2.) “(1) Except as provided in paragraph (2), any action under subdivision (a) shall be commenced within three years of the date a petitioning spouse had actual knowledge that the transaction or event for which the remedy is being sought occurred. [¶] (2) An action may be commenced under this section upon the death of a spouse or in conjunction with an action for legal separation, dissolution of marriage, or nullity without regard to the time limitations set forth in paragraph (1). [¶] (3) The defense of laches may be raised in any action brought under this section. [¶] (4) Except as to actions authorized by paragraph (2), remedies under subdivision (a) apply only to transactions or events occurring on or after July 1, 1987.” (Fam. Code, § 1101, subd. (d); Stats. 1986, ch. 1091, § 2.)