Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from a judgment of the Superior Court of Los Angeles County, County Super. Ct. No. BP087959, Joseph R. Kalin, Judge.
Anderholt & Turner and James D. Turner for Objectors and Appellants.
Hill, Farrer & Burrill, Julia L. Birkel and Casey L. Morris for Petitioner and Appellant Sonja Porter, as Executor of the Estate.
Law Office of Robert G. Splinter and Robert G. Splinter for Cross-Respondent The Estate of Arlene Kielbasa.
WOODS, J.
SUMMARY
This appeal and cross-appeal arise out of a judgment entered on a petition for financial elder abuse and undue influence. We affirm.
FACTUAL AND PROCEDURAL SYNOPSIS
Ina Mariani immigrated to the United States from Yugoslavia (now Croatia) in 1940 to join her husband Luka. Ina had completed sixth grade in Yugoslavia and attended cooking school for two years after that. She spoke very little English.
We refer to the parties by their first names as the parties have done in their briefing.
Ina and Luka were frugal and paid cash for everything. The one exception was when they purchased their home in San Pedro in 1940 for $3,000. They obtained a mortgage in the amount of $1,800, but paid off the balance within two years. Debt was unacceptable in their culture. Ina never used a check or credit card and never owed a debt. She never drove; she walked, used public transportation or got a ride from a friend.
Ina and Luka had three children: Sonja, Nick and Arlene. Arlene was an accountant. When Luka died in 1989, Ina continued to live in their home for another 10 years. Before her father’s death, Arlene had begun to handle her parents’ finances and continued to manage all of her mother’s finances. Ina “never took care of her own finances.” As Ina grew older, her eyesight was failing and she needed physical help to get around. Although she would not take it, she was prescribed Prozac for depression. She moved in with Arlene because the “loneliness . . . really got to her . . . .”
Sonja had five children, Nick had three children and Arlene had five children, including Katherine who is a party to this appeal.
Before she moved in with Arlene, Ina had spent Sundays with Nick and his family. Sonja had spoken with Ina by phone twice a week and would come down to visit from Carmichael (near Sacramento). After Ina moved in with Arlene, it became difficult to reach Ina, and Arlene did not communicate with her siblings about how Ina was doing. Nick and Sonja would try to call without success. When they spoke with Arlene, they asked her to let Ina know they had called, but Arlene told Ina on just one occasion Sonja had tried to reach her. Ina did not initiate calls except for emergencies, expecting her children to call her out of respect. She could not understand why she was not hearing from them. Many times, family members would call Ina’s number only to hear the sound of a fax machine. Nick knocked on Arlene’s door in an effort to visit and could hear people inside but no one would answer. In the three years after Ina moved in with Arlene, Sonja visited about 10 times. Arlene followed, listened and made it impossible to have a private conversation.
Arlene “loved gossip and controversy.” She was involved in past disruptions in Ina’s relationships with other family members. Ina became dependent on Arlene who did everything for her. Ina stopped taking care of herself. Although she had been a sharp dresser and very neat, she lived in clutter with dishes in the sink and remained in her bathrobe. She had loved to cook but stopped when she moved in with Arlene.
In September or October 1999, Arlene’s daughter Katherine and Katherine’s fiancé Jay London moved into Ina’s house. Arlene told Nick that Katherine and Jay were paying Ina $500 a month in rent. When Sonja objected that the amount was insufficient, Arlene said Katherine and Jay would be making repairs as well.
Arlene said Ina’s monthly Social Security check in the amount of $800 was not enough to cover Ina’s expenses, but it did not occur to her to rent Ina’s house so she could earn income and did not look into the rental value of the house.
For more than three years (from the fall of 1999 until January 2003), Katherine and Jay paid no rent. They paid property taxes twice a year in the amount of $226.27 and homeowner’s insurance in the amount of $365 either once or twice per year. They also repaired a gas leak, took care of a mold problem and plumbing problems, hooked up a dryer and dishwasher and replaced a stove. Katherine and Jay were saving $1100 a month (the rent they had been paying previously) by living rent-free in Ina’s house, but never gave her any money. Although they wanted a house, they did not save the money for a down payment.
Katherine had the idea to buy Ina’s house. Katherine and Ina discussed the idea several times over a few months. No one else was involved, and Katherine was Ina’s only source of information. They always spoke in English. Katherine knew Ina was 88 years old at the time and knew she could get sick and need medical care. Katherine had no idea what Ina’s medical expenses might cost.
According to Katherine, Ina told Katherine she wanted to give her the house, but Katherine insisted on paying $100,000. Katherine knew this amount was not the “fair value” of her grandmother’s home. She did not feel she had “such a particularly special relationship” with Ina that she should be the only relative to get the house. In keeping with her culture, Ina’s will left her property in equal shares to her three children. Ina had “no idea” how much the house was worth, how much money she had in the bank or that she was losing money every month.
Jay also acknowledged he and Katherine did not intend to pay Ina what the house was worth.
Jay asked his sister for a referral to a loan broker and he spoke with Lizette Loza of Powerhouse Mortgage. Loza asked Jay if he and Katherine had money for a down payment and he told her they did not. He told Loza he wanted $100,000 to pay Ina and another $80,000 cash to make repairs.
Loza arranged a loan with BNC Mortgage, a lender with a “gift of equity program” for property transfers between family members. Through this program, the prospective buyer needed no down payment, but the lender required a “gift of equity” letter—written confirmation that the seller intended to make a gift of her equity in the property.
After his inspection, Omar Loza prepared an appraisal report in which he opined Ina’s house was worth $235,000. Katherine and Jay were then able to obtain a loan in the amount of $188,000 in January 2003. After deducting costs, $174,000 was wired to Ina’s account on which Arlene was joint signatory. From that $174,000, Arlene gave $74,000 to Katherine and Jay. Katherine and Jay later refinanced, obtaining a loan in the amount of $235,000. With the proceeds, they paid off the original $188,000 loan and obtained an additional $50,000 in cash secured against the house.
In their opening brief, Katherine and Jay assert Omar Loza is Lizette Loza’s brother, but the record citations are silent on this point. Katherine and Jay testified that the initial appraisal came in at $205,000, but the second appraisal (by Omar Loza) came in at $235,000.
In August 2003, Arlene transferred $70,000 from Ina’s account into her own. Arlene used $15,000 to put a new roof on her house, $10,000 for air conditioning and heating and $5,500 to make her shower accessible to Ina who could not lift her feet (a total of $30,500). She said Ina told her to make these repairs and said to use the rest for her care.
By the end of the year, Ina was hospitalized and later moved to a convalescent facility (Pavilions) from January to June 2004. She returned to Arlene’s with a 24-hour caregiver but suffered a stroke in July. Ina was in the hospital for about a week or so before returning to Arlene’s again on hospice care. She died 10 days later (on August 12, 2004).
At that time, Sonja initiated a conservatorship proceeding for Ina, referencing her discovery of the transfer of Ina’s home to Katherine and Jay, Arlene’s representation Ina had no assets and Arlene’s refusal to explain or provide any information in this regard.
In April 2005, as executor of her mother’s will, Sonja filed a petition to establish the estate’s claim of ownership to the property, for an order directing its transfer to the estate and for financial elder abuse. (Prob. Code, §§ 850, subd. (a)(2), and 859; Welf. & Inst. Code, § 15610.30.) She alleged Ina had been in failing physical and mental health while in Arlene’s care and Arlene took advantage of her position of trust and confidence with Ina. “[Ina] was fraudulently induced into making the transfer [of her San Pedro residence] and/or was unduly influenced by” Arlene, Katherine and Jay such that the transfer was a wrongful taking of Ina’s property. Arlene and Katherine and Jay filed their responses and objections, and the matter proceeded to trial on both claims in December 2006.
Arlene died before trial (on January 9, 2006) so her estate was substituted in as a party and her testimony was presented by way of excerpts from her deposition. Her daughter Michelle was her executor and also testified at trial.
The parties stipulated the signature on the gift of equity letter was not Ina’s. Loza testified it was her practice to request the letter from the borrowers, and the borrowers usually drafted such letters. Jay and Katherine testified they had no involvement in preparing the letter or signature, did not know who did and did not know how the letter came to be in the lender’s file.
However, all parties to the transaction signed an amendment contained in the escrow file which stated in bold: “All parties are herein made aware and agree that this transaction is considered a gift of equity.”
Loza testified that she never met Ina personally, never spoke with her and did not witness her signature on the grant deed and had never seen that document. She testified, however, that the signature on the attached notice of acknowledgement—bearing the statement “on December 31, 2002 before me Lizette Loza personally appeared Ina Mariani”—was hers; she had signed that document. She said she did not recall “pre-signing” any notices of acknowledgement, but if she had, they would be in her possession for the most part.” She had no explanation for how her notarization came to be attached to the deed.
The grant deed could not have been recorded without the notarized acknowledgement of the signature on the deed, and lenders require that a deed be recordable before loaning money secured by a deed of trust.
In mid-2002, Ina asked Arlene to arrange for powers of attorney and a health care directive (in other words to that effect). Six months later, in February 2003, Arlene contacted an attorney who spoke Croatian (Anthony Vulin). He met privately with Ina and explained the documents to her. She signed the documents before a notary Vulin brought with him. The powers of attorney included the power to engage in real estate transactions on Ina’s behalf. Neither Arlene nor Ina said Ina had already sold her home a month before. Ina’s only other asset was her bank account and Arlene was already a joint signatory on that account.
Katherine and Jay presented testimony that Katherine asked Ina several times about paying rent, but Ina always objected. “She said she wasn’t paying rent to [Arlene] so [Katherine] didn’t need to pay rent to [Ina].” Katherine said she, Arlene and Ina spoke and visited daily and had always been close to Ina while Sonja and Nick had not.
When Katherine and Jay (and Katherine’s daughter Cortney) moved into Ina’s home, Jay had just graduated from the Sheriff’s Academy. After living in Ina’s home for three years, Katherine and Jay were married and expecting a child. She said her grandmother wanted to make a gift of her home, but Katherine insisted on paying her. Ina said $50,000 was enough, but Katherine insisted on paying her $100,000.
Sonja presented the expert testimony of Dr. Susan Bernatz, a specialist in geriatric neuropsychology, who opined Ina was susceptible to undue influence. Ina was particularly susceptible, Dr. Bernatz said, because of her age and gender and the fact she was widowed and depressed. She was unfamiliar with complex financial decisions and had confidential and trusting relationships with Arlene and Katherine.
Michelle (Katherine’s sister and Arlene’s executor) had testified that Katherine bathed her grandmother, clipped her toenails, took her shopping, to the cemetery and to doctor’s appointments and did whatever her grandmother asked of her. Arlene took care of her mother on a day-to-day basis and paid her bills and prepared her taxes. This closeness, Dr. Bernatz said, underscored Ina’s vulnerability to undue influence. Ina had not initiated the transaction and Katherine and Jay benefited while Ina lost.
Katherine and Jay presented testimony from several witnesses indicating that Ina was always a strong and determined woman, the matriarch of the family, and once she moved in with Arlene, she took over. Everyone did whatever Ina wanted. Arlene was a loving and generous woman. Ina would do what she wanted to do. Arlene did not want to be involved in the transaction between Katherine and Ina because she was afraid it would come back on her.
The financial elder abuse claim was submitted to a jury which returned a verdict in favor of Arlene, Katherine and Jay on that claim. The parties then argued the undue influence claim to the trial court. After taking the matter under submission, the trial court issued its tentative decision, ruling that Ina was subjected to the undue influence of Arlene, Katherine and Jay. The court ordered entry of judgment against Katherine and Jay (but not Arlene), requiring them to pay monetary damages and reconvey the property to Ina’s estate. No party requested a statement of decision. Katherine and Jay filed a motion for reconsideration and clarification of the court’s ruling. Sonja filed opposition to this motion as well as points and authorities in support of her proposed judgment. The court received three proposed judgments, denied the motion for reconsideration and, finding Katherine and Jay “to have taken property from . . . Ina . . . by use of undue influence,” entered judgment against Katherine and Jay, ordering them to reconvey the property and pay the sum of $276,691.40 to Sonja as executor of Ina’s estate.
In three separate verdict forms, jurors were asked: “Did [Jay, Katherine and Arlene (respectively)] wrongfully take Ina[’s] property with the intent to defraud?” All three forms were marked: “No.”
Katherine and Jay appeal, and Sonja cross-appeals because judgment was not entered against Arlene and because the court did not order double damages under Probate Code section 859 against Katherine and Jay.
DISCUSSION
I. Sonja’s Motion to Dismiss Katherine and Jay’s Appeal Is Denied.
Citing the pendency of Katherine and Jay’s Chapter 13 bankruptcy case, Sonja moved to dismiss Katherine and Jay’s appeal for lack of standing. On March 28, 2008, the bankruptcy court granted Katherine and Jay’s motion for relief from the automatic stay and annulled the automatic stay as to Sonja as well. According to Sonja, notwithstanding this order, Katherine and Jay still lack standing. We disagree.
We grant Sonja’s request that we take judicial notice of this document.
The bankruptcy court’s order specifically states: “[Katherine and Jay] may proceed in the non-bankruptcy forum to final judgment (including any appeals) in accordance with applicable non-bankruptcy law.” This case number is specifically referenced in the attachment, and the bankruptcy trustee is included on the proof of service. For the reasons addressed in People v. Kings Point Corporation (1986) 188 Cal.App.3d 544 and the authorities cited therein, we conclude that Katherine and Jay have standing to proceed in this matter.
II. The Trial Court’s Judgment Against Katherine and Jay Is Supported by Substantial Evidence.
Katherine and Jay assert that the jury’s resolution of the financial abuse claim in their favor precluded the court’s ruling on the equitable undue influence claim. We reject this contention as it is unsupported by any applicable authority. Katherine and Jay ignore the difference between the elements of each of these claims and the respective burdens of proof as we will discuss.
Further, their one-sided presentation of the evidence in their briefing ignores the evidence in support of the judgment notwithstanding the applicable substantial evidence standard.
The parties presented (drastically) conflicting evidence. Although the jury was persuaded that Sonja had failed to prove Katherine, Jay or Arlene had wrongfully taken Ina’s property with the intent to deceive, the court was called up to resolve a different question. Under Katherine and Jay’s own authorities, on the undue influence claim, the burden shifted to Katherine and Jay to establish that Ina fully understood the nature of the transaction, and there was substantial evidence to support the conclusion she did not. (O’Neil v. Spillane (1975) 45 Cal.App.3d 147; Stewart v. Marvin (1956) 139 Cal.App.2d 769; Longmire v. Kruger (1926) 80 Cal.App. 230.)
Furthermore, even assuming arguendo intent to deceive was required as Katherine and Jay argue (notwithstanding the authorities to the contrary), substantial evidence supports this conclusion as well.
III. As to Sonja’s Cross-Appeal, Substantial Evidence Supports the Trial Court’s Judgment to the Extent It Did Not Include Arlene or Order Katherine and Jay to Pay Double Damages for Bad Faith Under Probate Code Section 859.
Just as Sonja argues Katherine and Jay have ignored the substantial evidence standard in their appeal, Sonja similarly ignores the same standard in connection with her cross-appeal. Moreover, her reliance on the trial court’s tentative ruling is misplaced. “The tentative decision, however, does not constitute findings of fact and it may not be used to impugn subsequent findings or the judgment.” (United Pac. Ins. Co. v. Hanover Ins. Co. (1990) 217 Cal.App.3d 925, 934.) “We uphold judgments if they are correct for any reason.” (Id. at p. 933.) As established by our summary of the evidence, there was substantial evidence to support the court’s implied finding that while Katherine and Jay failed to establish Ina fully understood the implications of the transaction benefitting them, their conduct did not amount to bad faith. Similarly, in light of the testimony regarding Arlene’s use of Ina’s funds to benefit Ina, the judgment is supported as to her as well.
DISPOSITION
The judgment is affirmed. Each party is to bear its own costs of appeal.
We concur: PERLUSS, P.J. ZELON, J.