Opinion
D068222
04-20-2017
NPR FOUNDATION et al., Plaintiffs and Respondents, v. CARL DIMEFF, Defendant and Appellant.
James S. Link for Defendant and Appellant. Dentons US and Charles A. Bird 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. 37-2010-00150589-PR-TR-NC) APPEAL from a judgment of the Superior Court of San Diego County, William R. Nevitt, Jr., Judge. (Retired judge of the San Diego Sup. Ct.) Affirmed. James S. Link for Defendant and Appellant. Dentons US and Charles A. Bird for Plaintiffs and Respondents.
I.
INTRODUCTION AND PROCEDURAL BACKGROUND
Respondents NPR Foundation, San Diego State University Research Foundation/KPBS, US Fund for Unicef, and Doctors Without Borders/Médicins Sans Frontières (MSF) (collectively "the Charities") are each a 25 percent beneficiary of a trust that decedent Siv H. Ljungwe (Siv) executed in 2004 (2004 Trust). The Charities brought this action against Siv's attorney, appellant Carl Dimeff, seeking to invalidate a trust instrument that Siv executed in 2008 (2008 Trust), which named Dimeff as the sole beneficiary. The Charities alleged that the 2008 Trust is invalid because: Siv lacked capacity to execute the 2008 Trust (first cause of action); Dimeff procured the execution of the 2008 Trust by means of undue influence (second cause of action); and Dimeff is statutorily disqualified from benefiting from the 2008 Trust because he helped draft it (former Prob. Code, § 21350, subd. (a)(1)) (third cause of action). The Charities sought a return of the assets to the 2004 Trust or return of their fair market value, a statutory penalty in the amount of twice the value of the assets taken from the 2004 Trust (§ 859), and attorney fees, among other relief.
Unless otherwise specified, all subsequent statutory references are to the Probate Code.
After the first phase of a bifurcated bench trial, the trial court issued a statement of decision finding that Siv lacked capacity to execute the 2008 Trust, Dimeff procured the 2008 Trust by means of undue influence, and the 2008 Trust is invalid because Dimeff was a drafter of the trust (former § 21350, subd. (a)(1)). The trial court further found that the Charities are entitled to an order directing Dimeff to transfer all of the wrongfully converted assets of the 2004 Trust in his possession to the 2004 Trust and to pay to the 2004 Trust the fair market value of those assets that are no longer in his possession. The court also stated that it would determine the amount that Dimeff would be required to repay after the second phase of the trial. In addition, the court found Dimeff liable for a statutory penalty and attorney fees pursuant to section 859. After the second phase of the trial, the court ordered Dimeff to pay the successor trustee of the 2004 Trust $1,323,684.90, representing the value of a portion of the wrongfully converted assets, and a statutory penalty of $2,647,369.80 (§ 859). The trial court entered a judgment consistent with these statements of decision. In its judgment, the trial court stated that the 2008 Trust was "invalid ab initio," and that the 2004 Trust "is the valid governing and controlling instrument." The court subsequently amended the judgment to order Dimeff to pay the Charities attorney fees in the amount of $1,522,276.60.
On appeal, Dimeff claims that the trial court erred in determining that the 2008 Trust is invalid. Dimeff maintains that the court erred in finding that Siv lacked capacity, that Dimeff is a disqualified person under former section 21350, and that Dimeff procured Siv's execution of the trust by way of undue influence. We conclude that the trial court did not err in determining that the 2008 Trust is invalid pursuant to former section 21350 on the ground that Dimeff is a person who "drafted the instrument." (Former § 21350. subd. (a)(1).) We further conclude that the court did not err in invalidating the 2008 Trust on the ground that Dimeff procured the trust by way of undue influence.
We need not consider Dimeff's claim that the trial court erred in finding that Siv lacked capacity to execute the 2008 Trust, in light of our affirmance of the trial court's invalidation of the 2008 Trust pursuant to former section 21350, subdivision (a)(1) and finding of undue influence.
Dimeff also claims that the trial court erred in awarding the Charities a statutory penalty and attorney fees pursuant to section 859. We reject these arguments. Finally, Dimeff claims that there is not substantial evidence in the record to support the trial court's finding as to the amount that he must repay the 2004 Trust, and that the trial court erred in failing to award Dimeff various credits and offsets in determining the amount he must repay. We deem these arguments forfeited because they are inadequately briefed. Accordingly, we affirm the judgment in its entirety.
II.
FACTUAL BACKGROUND
A. The 1994 Trust
Siv and Anders L. Ljungwe (Anders) married in the 1950s. In 1994, Siv and Anders established a revocable trust ("the 1994 Trust"). The 1994 Trust contained a schedule listing the assets in the trust, which included numerous real estate parcels, various checking and savings accounts, and stock accounts. Although Siv and Anders remained married until Siv's death in 2010, they lived separately in different cities since at least 1994. B. Events leading to the execution of the 2004 Trust
In 2004, Siv and Anders' son, Par, was terminally ill. Siv refused to accept Par's terminal diagnosis and began interfering with Par's palliative care. In August 2004, Anders obtained a temporary restraining order against Siv ordering her to stay away from Anders. Siv violated the temporary restraining order by being in Anders's presence while he was visiting Par. Siv was arrested on several occasions for violating the order. On two occasions, Siv's behavior prompted arresting officers to take Siv to a hospital for a psychiatric evaluation. As a result of these evaluations, Siv was involuntarily confined for psychiatric treatment for periods of 72 hours and 14 days, respectively.
During this period, Siv contacted Dimeff's law firm concerning the restraining order. Approximately a month after her October 5, 2004 release from the second of her involuntary confinements, Siv entered into a retainer agreement with Dimeff's law firm pursuant to which Siv, as trustee of the 1994 Trust, agreed to hire Dimeff's firm in connection "with the interpretation and handling of administration of the [1994 Trust]." (Italics omitted.) Dimeff remained Siv's attorney until her death. C. The 2004 Trust
Dimeff drafted the 2004 Trust, a revocable trust, which Siv executed in November 2004. The 2004 Trust provided that the Charities were each entitled to a 25 percent share of the trust estate upon Siv's death. Schedule A of the 2004 Trust provided that the trust estate would be comprised of Siv's one-half interest in all of the assets of the 1994 Trust. Schedule A also contained the list of assets from the schedule in the 1994 Trust, with handwritten revisions. In addition, Dimeff prepared a pour-over will for Siv in 2004 ("the 2004 Will"). In the 2004 Will, Siv left all of her assets not in the 2004 Trust to the trustee of the 2004 Trust. D. The 2005 Investment Trust
Dimeff prepared an irrevocable private annuity trust for Siv in 2005 ("the 2005 Investment Trust"). Dimeff was named as the sole trustee of the 2005 Investment Trust, and the Charities were named as beneficiaries of the 2005 Investment Trust. E. Siv's relationship with Dimeff
During the course of their relationship, Siv became infatuated with Dimeff. This infatuation was manifested in hundreds of letters, notes and cards that Siv sent to Dimeff. The writings reflected Siv's delusional beliefs that she and Dimeff were in an intimate relationship and that Dimeff possessed special powers.
Dimeff had actual knowledge that Siv suffered from mental health issues, based on statements she made to him and the content of letters she wrote to him, which he received while she was alive.
Sometime in 2006 or 2007, Siv began telling Dimeff that she wanted to leave her estate to him. Dimeff told Siv that he could not personally draft a testamentary instrument devising all of her property to him. Dimeff referred Siv to his friend, attorney Kirk Miller, to prepare a new trust. Miller had recently represented Dimeff in litigation. Siv agreed to consult with Miller. F. The 2008 Trust
Prior to beginning the drafting of the 2008 Trust, Miller learned that Siv had a history of mental illness. Miller asked Dimeff whether Siv was still suffering from mental problems. Dimeff told Miller that Siv's mental problems were in the past and that he saw no signs of any ongoing mental illness. Miller relied on Dimeff's statements about Siv's mental health in drafting the 2008 Trust.
When Miller asked Siv what assets she wanted in the new trust, Siv told Miller, " '[Dimeff] has all that information, get it from him.' " Dimeff subsequently had approximately six discussions with Miller over the telephone concerning Siv and her estate plan while Miller was preparing the 2008 Trust. Dimeff also met with Miller on at least one occasion to discuss and review Siv's assets.
Miller prepared the 2008 Trust for Siv. Dimeff provided Schedule A of the 2004 Trust for inclusion as Schedule A of the 2008 Trust. Dimeff drafted the introductory section of Schedule A, which specified that the trust estate would be comprised of Siv's one-half interest in all of the assets of the 1994 Trust.
On October 27, 2008, Dimeff, Siv and Miller met to discuss the 2008 Trust's " 'property and assets.' " Siv executed the 2008 Trust that same day. The 2008 Trust is a revocable trust that names Dimeff as successor trustee and sole beneficiary of the trust estate. After executing the 2008 Trust, Siv had lunch with Dimeff and Miller. G. Dimeff's possession of assets belonging to the 2004 Trust
After Siv died in 2010, Dimeff was in possession of assets that were initially in the 2004 Trust. For example, Dimeff "admitted that he transferred approximately $400,000 of trust funds out of the trust account." Among the assets that Dimeff possessed were financial assets including cash and securities valued at $1,323,684.90.
III.
DISCUSSION
A. The trial court did not err in determining that Dimeff is a person who "drafted the instrument" and that the 2008 Trust is therefore invalid pursuant to former section 21350
Dimeff claims that the trial court erred in determining that the 2008 Trust is invalid pursuant to former section 21350 because Dimeff is a person who "drafted the instrument." (Former § 21350, subd. (a)(1). Dimeff claims that former section 21350, subdivision (a)(1) does not apply to him "[a]s a matter of law" (emphasis omitted) because undisputed evidence in the record establishes that he did not draft the 2008 Trust.
It is undisputed that former section 21350, subdivision (a)(1) applies in this case, despite its repeal. (Stats. 2011, ch. 296, § 245); see Jenkins v. Teegarden (2014) 230 Cal.App.4th 1128, 1138 [noting that "[w]hen the Legislature repealed . . . [former] section 21350 et seq. . . . it . . . reenact[ed] . . . [former] section 21350 et seq. as . . . section 21380 et seq., with only minor changes," and concluding that former section 21350 governs instruments that became irrevocable before January 1, 2011].)
We assume for purposes of this decision that the de novo standard of review applies to Dimeff's claim. (See, e.g., Haworth v. Superior Court (2010) 50 Cal.4th 372, 385 [stating that "in most instances, mixed questions of fact and law are reviewed de novo" because " ' "usually the application of law to fact will require the consideration of legal concepts and involve the exercise of judgment about the values underlying legal principles" ' "].)
1. Former section 21350
Former section 21350 provides in relevant part:
"(a) . . . [N]o provision, or provisions, of any instrument[] shall be valid to make any donative transfer to any of the following:
"(1) The person who drafted the instrument."
"Instrument" is defined in section 45 as "a will, trust, deed, or other writing that designates a beneficiary or makes a donative transfer of property."
In Rice v. Clark (2002) 28 Cal.4th 89, 91-92 (Rice), the California Supreme Court outlined the legal background of former section 21350, which, the Rice court noted, "presumptively disqualifies, as the recipient of a donative transfer by instrument, a person who drafts the instrument ([former § 21350], subd. (a)(1)) or who, having a fiduciary relationship with the transferor, 'transcribes the instrument or causes it to be transcribed' ([former § 21350], subd. (a)(4))." The Rice court stated that it is well established that a testamentary instrument procured by undue influence is invalid (Rice, supra, at p. 96), and that a presumption of undue influence may arise upon a showing that the person alleged to have exerted such influence had a confidential relationship with the testator. (Id. at pp. 96-97.) "Supplementing the [law governing undue influence], the Legislature in 1993[,] added . . . part 3.5 of division 11 of the Probate Code (hereafter part 3.5), comprising sections 21350 to 21356 . . . ." (Id. at p. 97.) Citing the statute's legislative history, the Rice court explained, "The 1993 legislation was introduced in response to reports that an Orange County attorney who represented a large number of Leisure World residents had drafted numerous wills and trusts under which he was a major or exclusive beneficiary, and had abused his position as trustee or conservator in many cases to benefit himself or his law partners." (Ibid.)
Elsewhere in its opinion, the Rice court noted that while the presumption is conclusive as to drafters (Rice, supra, 28 Cal.4th at p. 98), it may be rebutted by other presumptively disqualified transferees upon the transferee's showing of "the absence of undue influence, fraud or duress by clear and convincing evidence . . . ." (Ibid., italics omitted.)
See pt. III.B, post, for our discussion of Dimeff's claim that the trial court erred in finding that the 2008 Trust is invalid because it is a product of his undue influence.
The Rice court also discussed the purpose of the statutory scheme while interpreting the meaning of the presumptive prohibition against transfers to a transferor's fiduciary who "transcribes the instrument or causes it to be transcribed." (Former § 21350, subd. (a)(4).) The Rice court stated:
"While part 3.5 [i.e., former section 21350 et seq.], like the preexisting section 6104[] and case law, is intended to help protect elderly and infirm testators against fraud, duress and undue influence, the new law focuses more specifically on those who directly participate in the preparation of a donative instrument, because 'such participants are in a position where they can easily control or influence the distribution of property under the instrument to their benefit and contrary to the true intent of the trustor or testator.' [Citation.] While virtually anyone acquainted with a testator might in some circumstance use fraud, duress or undue influence to obtain a testamentary gift—a gift that would be ineffective under section 6104 and the decisional law—those who directly participate in the instrument's physical preparation, whether by drafting or transcribing it, are particularly well situated to insert gifts to themselves, their families or business associates, and to secure the instrument's execution. Transcription—the process of reducing an instrument to final written form—'obviously carries with it the opportunity to fraudulently alter the terms of the document to the transcriber's advantage.' [Citation.] In the same manner, one who directs an instrument's transcription can easily cause the inclusion of provisions benefiting him or herself, as can a person who drafts an instrument. Only as to this restricted class of persons directly involved in the donative instrument's physical preparation did the Legislature, in enacting part 3.5, prohibit the receipt of gifts by a stricter standard than the preexisting law provided." (Rice, supra, 28 Cal.4th at pp. 103-104, italics altered.)
Section 6104 provides, "The execution or revocation of a will or a part of a will is ineffective to the extent the execution or revocation was procured by duress, menace, fraud, or undue influence."
2. Application
As Dimeff correctly notes, "The term 'drafted,' as used in [former section 21350, subdivision (a)(1)] is not defined in the [Probate] Code." We assume that Dimeff is also correct that the term "drafted" should be interpreted consistent with common definitions of the word "draft" such as " '[t]o write or compose,' " or " '[t]o create by thinking and writing, compose.' " Thus, we assume further that Dimeff is correct that in order "to draft an instrument within the meaning of [former] section 21350, the person must think, write or compose a 'provision, or provisions,' [former § 21350, subd. (a)] in an instrument that 'make[s] any donative transfer.' [Former § 21350, subd. (a)]"
Dimeff drafted the introduction to Schedule A of the 2004 Trust, and Schedule A was incorporated into the 2008 Trust. That introduction states in relevant part as follows:
"Siv. H. Lungwe Living Trust Schedule 'A'
"The Siv H. Ljungwe Trust shall be comprised of my one-half interest in all assets, wheresoever located, listed on that certain Schedule 'Trust Estate' of the 'Ljungwe Family Trust' dated August 5, 1994, as signed, dated and notarized by Anders L. Ljungwe and Siv H. Ljungwe on September 9, 1994, and subsequently updated on August 6, 2001. Copies of the Schedule identifying Ljungwe Family Trust assets is attached hereto and incorporated herein by reference. My one half interest in the assets of the Ljungwe Family Trust are to be assets of the Siv H. Ljungwe Trust, dated November 17, 2004."
Miller testified that Siv and Anders had prepared the list of assets that followed the introduction.
Further, the trial court found that "[Dimeff] discussed Schedule A with Miller multiple times; [Dimeff] gave Miller a copy of Schedule A to use in the 2008 . . . Trust, and Schedule A became a part of the 2008 . . . Trust." The trial court also noted that Article 2.01 of the 2008 Trust defines the "trust estate" as the property described in Schedule A. Dimeff and Siv told Miller that Schedule A would contain a list of assets that Siv owned.
In sum, Dimeff was a drafter of the provision in the 2008 Trust that defined the scope of the trust estate, and Dimeff provided that provision to Miller for inclusion in the 2008 Trust. In so acting, Dimeff was "in a position . . . [to] easily control or influence the distribution of property under the instrument to [his] benefit and contrary to the true intent of the trustor or testator" (Rice, supra, 28 Cal.4th at p. 103) and was "directly involved in the donative instrument's physical preparation." (Id. at pp. 103-104.)
Dimeff's arguments in support of his claim that the trial court erred in determining that he was disqualified under former section 21350, subdivision (a)(1) are not persuasive. Dimeff argues:
"[Dimeff] did not think, write and compose anything for the 2008 Trust. Rather he provided Schedule A from the 2004 Trust. Simply providing the existing schedule of assets to another attorney cannot be construed as thinking, writing and composing . . . . If that were the case, anyone providing an attachment for a will or trust, such as a bookkeeper, accountant or property manager, which contains a list of assets he or she prepared, would be considered a person who drafted the trust. There is simply no thinking and composing involved in such actions."
We disagree with Dimeff to the extent that he intends to argue that a person, such as a bookkeeper, who prepares (i.e., drafts) a list of assets that is to be directly incorporated into a trust is not someone who is "directly involved in the donative instrument's physical preparation." (Rice, supra, 28 Cal.4th at pp. 103-104). In Rice, supra, the Supreme Court noted that a prospective transferee named Clark "facilitated the . . . preparation and execution [of a will and a trust] by giving [an attorney's] office a list of [the transferor's] assets that were to be placed in the trust." (Id. at p. 105.) However, the Rice court did not state that Clark had himself prepared the list of assets, nor did the Rice court state that Clark's list was prepared for direct incorporation into the instruments at issue in that case. Rather, Clark provided a list of assets to the attorney, and the attorney and his secretary then created instruments that directed the disposition of these assets. (See id. at p. 101 [stating that the attorney's "secretary actually prepared the instruments at [the attorney's] direction"].) Moreover, the Rice court made clear that the secretary and the attorney were disqualified persons under former section 21350. (See Rice, supra, at p. 105 ["Both [the will and the trust] were transcribed by [the attorney's] secretary at [the attorney's] direction"].) In contrast, the Rice court concluded that Clark was not disqualified under former section 21350 since he had not worked on "the preparation, drafting, or transcription of the instruments." (Rice, at p. 101.)
Certainly a person who prepares a list of assets that is to be directly incorporated into an instrument as comprising the trust estate is "particularly well situated to insert gifts to themselves" (Rice, supra, 28 Cal.4th at p. 103), one of the evils the Rice court stated former section 21350 was enacted to guard against.
To the extent the hypothetical bookkeeper that Dimeff posits in his brief "prepar[es]" a list of assets (i.e., drafts a list of assets) for direct incorporation into a trust, the bookkeeper would be acting in the same manner as the disqualified attorney in Rice. In contrast, if the bookkeeper merely passed along a preexisting list that someone else had drafted, and the list was not directly incorporated into the trust, the bookkeeper would be acting similarly to Clark, and would not be disqualified under former section 21350.
More importantly, whatever may be said of the hypothetical bookkeeper, it is clear that Dimeff did not merely provide a list of assets to Miller. Rather, as Dimeff acknowledges, Dimeff drafted the introduction to Schedule A, and the introduction was not merely a list of assets. Rather, Dimeff drafted language providing that a specific portion of the 1994 Trust (i.e., Siv's one-half interest in the assets of the 1994 Trust) constituted the assets of the 2008 Trust. In drafting this language, Dimeff was plainly in a position to "easily control or influence the distribution of property under the instrument to [his] benefit and contrary to the true intent of the trustor . . . ." (Rice, supra, 28 Cal.4th at p. 103.) For example, if Siv had expressed her intention to Dimeff that only a portion of her interest in the assets in the 1994 Trust was to be placed in the 2008 Trust, but Dimeff drafted Schedule A as stated in the record, he would have drafted language contrary to Siv's true intent. Moreover, the language that Dimeff drafted was directly incorporated in the 2008 Trust. Accordingly, we reject Dimeff's contention that he did not "think, write and compose" a provision of the 2008 Trust.
We emphasize that there need not be evidence that Dimeff actually abused his position as a drafter of the 2008 Trust in order for Dimeff to be statutorily disqualified. Rather, Dimeff is statutorily disqualified merely because he was a drafter of the instrument. (Former § 21350, subd. (a)(1).)
The remainder of Dimeff's arguments fare no better. Dimeff contends that he is not statutorily disqualified because "Schedule A . . . is not a writing that makes a 'donative transfer' to anyone." The statutory prohibition does not apply solely to the drafting of a " 'donative transfer.' " Rather, former section 21350 invalidates provisions making donative transfers to a person who drafted the instrument. (See former § 21350, ["[N]o provision, or provisions, of any instrument shall be valid to make any donative transfer to any of the following: (1) The person who drafted the instrument" (italics added)].) For the reasons stated in the previous paragraphs, Dimeff is a drafter of the 2008 Trust. It is irrelevant whether the portion of the 2008 Trust that Dimeff drafted itself contained a donative transfer.
Dimeff's observation that other instruments that transfer property to a trust, such as real estate grant deeds or stock certificates, may not constitute donative transfers, is irrelevant and thus unpersuasive. (Citing Rice, supra, 28 Cal.4th at p. 99, fn. 5 [stating it is "doubtful" that "deeds and stock transfers into the [revocable] trust were instruments making a 'donative transfer' within the meaning of [former] section 21350," where trustor was sole beneficiary of the trust during her lifetime].) Dimeff is not disqualified due to his drafting of other instruments; he is disqualified because of his drafting of a provision of the 2008 Trust.
Dimeff also argues that the trial court erred in finding that Schedule A was "necessary" to the "funding" of the 2008 Trust. Even assuming for the sake of argument that the 2008 Trust was "funded" by some other means, the fact remains that Dimeff drafted Schedule A, a provision in the 2008 Trust that defines the scope of the trust estate. Further, Dimeff does not dispute that the 2008 Trust, including Schedule A, was a valid method of creating a trust in the property named in Schedule A. (See Estate of Heggstad (1993) 16 Cal.App.4th 943, 950-951 (Heggstad) ["a declaration of trust is sufficient to create a trust, without the need of a conveyance of title to the settlor as trustee"].) It is for this reason that he is statutorily disqualified from benefitting from the 2008 Trust.
The Heggstad court explains:
"[T]he practice guide, Drafting California Revocable Living Trusts, supra, supports our conclusion that a transfer of title is not necessary when the settlor declares himself trustee in his own property. Section 1.6 of that practice guide states in part: 'A trust always requires transfer of legal title to the trustee or, if a settlor is also trustee, a declaration by the settlor that he or she holds legal title in trust for another.' (Emphasis added.) In fact, the very language recommended by that practice guide for declaring trusts is consistent with the decedent's trust document. Section 3.14-1 reads: "[Name of settlor] (called the settlor or the trustee, depending on the context) declares that [he/she] has set aside and holds in trust [e.g., the property described in Schedule A attached to this instrument] . . . .' Article One of the trust substantially tracks this language and constitutes a valid declaration of trust in the property identified in Schedule A. Decedent took all the necessary steps to create a valid revocable living trust." (Heggstad, supra, 16 Cal.App.4th at p. 950.)
Finally, Dimeff's reliance on this court's opinion in Ukkestad v. RBS Asset Finance, Inc. (2015) 235 Cal.App.4th 156, 163 (Ukkestad) in support of his contention that Schedule A is not a material provision in the 2008 Trust is unconvincing. Dimeff argues:
"[In Ukkestad], as here . . . the trust stated that all properties listed on the attached schedule and properties transferred into the trust are assets of the trust. In Ukkestad, the schedule was not attached to the trust. Yet this Court held that properties that had been titled to the trust were trust assets. (Id.) Since the schedule is not actually needed to effect the creation of a trust, such a list of properties can hardly be deemed a 'donative transfer.' " (Italics added.)
As noted above, Dimeff is disqualified because he drafted, in part, the instrument that contains a donative transfer.
Dimeff badly misreads the case. In Ukkestad, the trust did not refer to all properties in an attached schedule. Rather, the trust in Ukkestad transferred "all of [the trustor's] . . . real property . . . , wherever situated" to the trust. (Ukkestad, supra, 235 Cal.App.4th at p. 163.) The Ukkestad court concluded that the trust adequately conveyed real property titled to the trustor to the trust because the trust stated that "all of [trustor's] real . . . property" was included in the Trust's assets. (Id. at p. 164.) In this case, the 2008 Trust, unlike in Ukkestad, defines the trust estate as "[a]ll of the property described in Schedule A," (italics added) thereby making the materiality of Schedule A (which Dimeff drafted) apparent. In fact, the Ukkestad court distinguished a case, Osswald v. Anderson (1996) 49 Cal.App.4th 812, 818 (Osswald), in which the trust conveyed the property contained in the trust's schedule A, but neglected to include a schedule A. In Osswald, "as no property whatsoever was described in the trust document, there was no writing identifying the trustors' real property that could be made more certain by reference to extrinsic evidence." (Ukkestad, supra, at p. 163.) In short, there is nothing in Ukkestad that supports Dimeff's suggestion that a "schedule is not actually needed to effect the creation of a trust," in a case, such as this, in which the trust defines the trust estate as property listed in the schedule.
Dimeff is incorrect in stating that the properties in Ukkestad "had been titled to the trust." (Italics added; see Ukkestad, supra, 235 Cal.App.4th at p. 159 ["According to the grant deeds, title to the Two Parcels was held by [trustor] as an individual"].)
Accordingly, we conclude that the trial court did not err in determining that Dimeff is a person who "drafted the instrument" (former § 21350, subd. (a)(1)), and that the 2008 Trust is therefore invalid pursuant to former section 21350. B. The trial court did not err in determining that the 2008 Trust is invalid because it is the product of Dimeff's undue influence
Dimeff also claims that the trial court erred in determining that the 2008 Trust is invalid pursuant to former section 21350, subdivision (a)(4) because Dimeff is a person who "transcribe[d] the instrument or cause[d] it to be transcribed." (Ibid.) We need not consider this claim in light of our conclusion the trial court did not err in determining that the 2008 Trust is invalid pursuant to former section 21350, subdivision (a)(1).
Our conclusion in this part provides an alternative ground for affirming the trial court's judgment invalidating the 2008 Trust.
Dimeff claims that the trial court erred in determining that the 2008 Trust is invalid because it is the product of Dimeff's undue influence.
1. Governing law
"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, supra, 28 Cal.4th at p. 96.) The Rice court explained that a presumption of undue influence arises under the following circumstances:
"Although a person challenging the testamentary instrument ordinarily bears the burden of proving undue influence . . . , this 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, supra, at pp. 96-97.)The Rice court further explained that "where [the] person alleged to have exerted influence was testator's attorney, any benefit other than compensation for legal services may be considered "undue.' " (Id. at p. 97 [citing Estate of Auen (1994) 30 Cal.App.4th 300, 309].)
Whether the presumption of undue influence applies, and if so, whether it has been rebutted, are factual issues to be resolved by the trial court. (Estate of Sarabia (1990) 221 Cal.App.3d 599, 605.) We review the trial court's findings to determine whether they are supported by substantial evidence. (See Estate of Auen, supra, 30 Cal.App.4th at pp. 311-313.)
2. The trial court's finding that the 2008 Trust is a product of undue influence
The trial court found that the 2008 Trust is the product of undue influence. In support of this finding, the court expressly relied on the presumption of undue influence outlined above. The court found that Dimeff "had two confidential relationships with Siv, that of attorney-client, and that of trustee-beneficiary.[]" With respect to the undue benefit prong, the court found that Dimeff received a "great benefit" from the 2008 Trust. Finally, the court provided a detailed description of the basis for its finding that Dimeff actively participated in procuring the execution of the 2008 Trust. Among other facts, the trial court noted that Dimeff referred Siv to Miller, an attorney that "did not have much experience drafting estate plans," spoke with Miller numerous times about Schedule A and the 2008 Trust's assets, "drafted Schedule A and gave it to Miller to use in the 2008 . . .Trust," and "faxed documents regarding the [2008 Trust] assets [with Miller] on the day it was signed."
This relationship was premised on Dimeff's role as the trustee of the 2005 Investment Trust. (See part II.D, ante.)
The trial court also found that Dimeff had not rebutted the presumption of undue influence by way of clear and convincing evidence, as required. In support of this finding, the trial court found that "Siv was obsessed and delusional about [Dimeff] and his powers," and that Dimeff "knew of Siv's vulnerabilities and let them work to his advantage."
The trial court added, "Even assuming [Dimeff] needed to rebut the presumption by merely a preponderance of the evidence, [Dimeff] failed to do even that."
The court also stated that even if the presumption of undue influence were not applied, "the evidence favoring the Charities is so strong that the Charities would still prevail on their undue influence claim against [Dimeff]."
3. Application
Dimeff asserts in his opening brief, "[b]ecause [former] section 21350 is not applicable and since [Dimeff] did not prepare the 2008 Trust, the Charities bore the ' "burden of proving undue influence" . . . .' " Beyond this single sentence, Dimeff fails to present any argument demonstrating that there is not substantial evidence in the record to support the trial court's finding that "[a] presumption of undue influence has been established against [Dimeff]. The burden is shifted to [Dimeff] to rebut the presumption." Given the lack of any meaningful argument in his opening brief in support of a claim that the trial court erred in finding that a presumption of undue influence applied, Dimeff has forfeited his claim that the trial court erred in determining that the 2008 Trust is invalid because it is a product of Dimeff's undue influence. (See, e.g., DP Pham LLC v. Cheadle (2016) 246 Cal.App.4th 653, 674 (DP Pham LLC) [appellant forfeits argument "by failing to adequately support it with argument and relevant legal authority"].)
In his reply brief, Dimeff argues that he did not "actively participate in procuring the [2008 Trust]" and discusses case law interpreting the concept of active participation in this context. Dimeff contends that his lack of active participation in the preparation of the 2008 Trust is demonstrated by his argument in support of his contention that the trial court erred in finding that Dimeff was disqualified pursuant to former section 21350. Even assuming that we were to consider this argument, which is raised improperly for the first time in reply (but see Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal.App.4th 847, 894 , fn. 10 [" ' "points raised in the reply brief for the first time will not be considered, unless good reason is shown for failure to present them before" ' "], we would reject Dimeff's argument for the reasons stated in part III.A, ante. Dimeff was a drafter of the provision in the 2008 Trust that provided the definition of the scope of the trust estate and he provided that provision to Miller for inclusion in the 2008 Trust. This evidence constitutes substantial evidence that Dimeff "actively participated" in the 2008 Trust's preparation. (Rice, supra, 28 Cal.4th at p. 97.) Moreover, Dimeff fails to address additional evidence of his active participation discussed by the trial court, including his close communication with Miller during the preparation of the 2008 Trust and near the time of the execution of the 2008 Trust, which provides additional support for the trial court's finding that a presumption of undue influence applies.
Dimeff does not challenge the trial court's findings that he had a confidential relationship with Siv and that he received an undue benefit under the 2008 Trust.
Finally, Dimeff fails to make any argument that the record lacks substantial evidence to support the trial court's finding that he failed to carry his burden to rebut the presumption of undue influence by clear and convincing evidence. In any event, given evidence of Dimeff's participation in the preparation of the 2008 Trust and Siv's delusions involving Dimeff, there is ample evidence supporting the trial court's finding.
The primary authority upon which Dimeff relies, Estate of Bleil (1929) 96 Cal.App. 283, is entirely distinguishable because in that case, the Court of Appeal stated that although the attorney for the testator benefited from the will, there was no active participation by the attorney for the testator in the preparation of the will. (Id. at pp. 287-288.)
Accordingly, we conclude that the trial court did not err in determining that the 2008 Trust is invalid because it is a product of Dimeff's undue influence. C. The trial court did not err in awarding the Charities a statutory penalty and attorney fees pursuant to section 859
Dimeff claims that the trial court erred in awarding the Charities a statutory penalty and attorney fees under section 859. Dimeff contends that the Charities are not entitled to recover such penalty and attorney fees because the Charities failed to "plead a section 850 petition," and because the "bad faith required . . . does not exist in this record as a matter of law."
1. Relevant statutory scheme
Section 850 provides in relevant part:
"(a) The following persons may file a petition requesting that the court make an order under this part:
"[¶] . . . [¶]
"(3) The trustee or any interested person in any of the following cases:
"[¶] . . . [¶]
"(B) Where the trustee has a claim to real or personal property, title to or possession of which is held by another."
Section 859 provides in relevant part:
"If a court finds that a person has in bad faith wrongfully taken, concealed, or disposed of property belonging to . . . a trust . . . or has taken, concealed, or disposed of the property by the use of undue influence in bad faith . . . the person shall be liable for twice the value of the property recovered by an action under this part. In addition, . . . the person may, in the court's discretion, be liable for reasonable attorney's fees and costs. The remedies provided in this section shall be in addition to any other remedies available in law to a person authorized to bring an action pursuant to this part."
2. The trial court's award of a statutory penalty and attorney fees pursuant to section 859
In its first statement of decision, the trial court stated that the Charities' petition, "sought an order directing [Dimeff] to transfer all of the assets belonging to the trust he has wrongfully converted for his own use." The court also noted that "[a]lthough . . . section 850 was not specifically named, this relief is consistent with the relief provided by section 850." The court also stated that the petition "specifically sought double damages[] under . . . section 859 and an award of attorneys' fees and costs." In addition, the court noted that the parties' Joint Trial Readiness Conference Report acknowledged that an award of double damages pursuant to section 859 was at issue in the case. Further, the court noted that both parties presented evidence and argument on the issue of section 859 double damages at trial. In addition, the court stated that Dimeff had not demurred to the petition nor brought any other objection to the form of the pleadings.
Both the parties and the trial court refer to this aspect of the court's award as an award of double damages. For the sake of clarity, we employ this terminology as well, notwithstanding that an award of "twice the value of the property recovered," (§ 859, italics added) may not technically be an award of double damages. (See Estate of Kraus (2010) 184 Cal.App.4th 103, 117 ["Section 850 et seq. does not contemplate an award of damages to anyone"].)
Pursuant to section 856, the court ordered Dimeff to transfer to the temporary trustee of the 2004 Trust "all the 2004 Trust assets of which [Dimeff] had custody, possession or control." The court also ordered:
Section 856 provides in relevant part: "[I]f the court is satisfied that a conveyance, transfer, or other order should be made, the court shall make an order authorizing and directing the personal representative or other fiduciary, or the person having title to or possession of the property, to execute a conveyance or transfer to the person entitled thereto, or granting other appropriate relief."
"To the extent he is no longer in possession of those assets, [Dimeff] must pay the 2004 Trust the fair market value of those assets in an amount to be determined by the court. The evidence established that [Dimeff] has taken assets that belong to the 2004 Trust. For example, [Dimeff] admitted that he transferred approximately $400,000 of trust funds out of the trust account. The exact amount of assets that [Dimeff] must return to the acting trustee of the 2004 Trust will be one issue to be determined in the second phase of trial."
In addition, the trial court determined that Dimeff's conduct fell "within the parameters of section 859." Specifically, the court found that, "[b]y means of undue influence committed against an elder, [Dimeff] in bad faith wrongfully took property belonging to a trust and attempted to conceal his actions from the Charities." The court stated that "in addition to recovery of the property recovered from [Dimeff], the Charities are also awarded, pursuant to . . . section 859, twice the value of that property recovered," and "an award of attorneys' fees and costs."
3. The Charities' failure to specifically identify section 850 in their petition did not preclude the trial court from awarding twice the value of the property recovered and attorney fees pursuant to section 859
Dimeff claims that the Charities are not entitled to recover "double damages and attorney fees under section 859 because they failed to plead a section 850 petition." Dimeff's claim raises a question of law, which we review de novo. (See, e.g., Abatti v. Imperial Irrigation Dist. (2012) 205 Cal.App.4th 650, 668 ["Because appellants' claim raises a pure question of law, we apply the de novo standard of review"].)
It is well established that " '[n]o error or defect in a pleading is to be regarded unless it affects substantial rights.' [Citation.] The primary function of a pleading is to give the other party notice so that it may prepare its case [citation], and a defect in a pleading that otherwise properly notifies a party cannot be said to affect substantial rights." (Harris v. City of Santa Monica (2013) 56 Cal.4th 203, 240.)
In this case, as the trial court explained in its statement of decision, a review of the petition, joint trial readiness report, and trial briefing makes clear that Dimeff's substantial rights were not violated by the Charities' failure to specifically plead a cause of action under section 850 et seq. in their petition. The petition sought both an order directing Dimeff to transfer assets that he had wrongfully converted as well as double damages under section 859 and attorney fees. In addition, the Joint Trial Readiness Conference Report specifically cites section 859 and states that legal issues to be decided include "whether [Dimeff] is liable for taking, concealing or disposing of property belonging to Siv or the Trust, and consequently liable for twice the value of said property" and "whether [the Charities] are entitled to reimbursement of their attorneys' fees and costs from [Dimeff]." In his trial brief, in discussing whether the Charities would be entitled to section 859 double damages, Dimeff stated that "[p]etitioners would only be entitled to such damages if they can first invalidate the Trust, then demonstrate that [Dimeff] took property and finally that the taking was for a wrongful purpose and in bad faith."
The petition sought such relief in its prayer, which Dimeff correctly notes is not part of a statement of a cause of action. However, a prayer for relief that, as in this case, is consistent with the allegations of a complaint may "be resorted to in an effort to ascertain plaintiff's theory of action," (Hails v. Martz (1946) 28 Cal.2d 775, 777-778), and where evidence on the issue referred to in the prayer was admitted "during the trial without objection . . . it may not . . . be successfully [on appeal] . . . that the claim . . . was not properly put in issue." (Id. at p. 778.)
Dimeff's arguments on appeal do not identify any basis on which to conclude that his substantial rights were violated by any defect in the Charities' pleading. Dimeff asserts that in failing to plead a section 850 petition, the Charities "failed to follow the mandatory and nonwaivable notice requirements for such a proceeding. Section 851." Section 851 merely provides for service of the petition at least 30 days prior to the hearing on the petition. Dimeff fails to present any argument that he did not have adequate notice that the Charities were seeking relief pursuant to section 850 et seq. or that he was prejudiced by any failure to provide such notice. On the contrary, the record, including the petition and the Joint Trial Conference Readiness Report establish that Dimeff had adequate notice.
Section 851 provides in relevant part:
"(a) At least 30 days prior to the day of the hearing, the petitioner shall cause notice of the hearing and a copy of the petition to be served in the manner provided in Chapter 4 (commencing with Section 413.10) of Title 5 of Part 2 of the Code of Civil Procedure on all of the following persons where applicable:
"(1) The personal representative, conservator, guardian, or trustee as appropriate.
"(2) Each person claiming an interest in, or having title to or possession of, the property."
Dimeff also asserts that "[i]n the absence of a section 850 petition, there can be no section 859 penalty." Dimeff has cited no authority, and we are aware of none, stating that a party may escape the imposition of a statutory penalty merely because of a technical defect in an opposing party's pleading that did not affect the substantial rights of the penalized party. Thus, the mere fact that section 859 provides for a statutory penalty and no separate section 850 petition was filed is not a basis for reversal of the judgment.
In a related argument, Dimeff notes that there "is a 'general rule that statutory causes of action must be pleaded with particularity.' " (Covenant Care, Inc. v. Superior Court (2004) 32 Cal.4th 771, 790.) Dimeff fails to demonstrate that any omitted allegations affected his substantial rights.
Finally, Dimeff appears to contend that the petition failed to state a cause of action under section 850 because, he asserts, a claim that a party failed "to state a cause of action is never waived." (Citing Code Civ. Proc., § 430.80, subd. (b).) Even assuming that Dimeff's "objection that the pleading does not state facts sufficient to constitute a cause of action," (Code Civ. Proc., § 430.80, subd. (a)) is not barred by the theory of the case doctrine (but see Nelson v. Dept. Alcoholic Bev. Control (1959) 166 Cal.App.2d 783, 787-788 [rejecting appellant's claim that certain counts "do not state a cause of action" because "[w]hen a case is tried on the 'assumption that a cause of action is stated, that certain issues are raised by the pleadings, that a particular issue is controlling, . . . neither party can change this theory for purposes of review on appeal' "]), Dimeff fails to demonstrate that the petition does not allege sufficient facts to state a claim under section 850. The mere fact that the petition did not specifically refer to section 850 does not constitute such a demonstration.
The intended citation is Code of Civil Procedure section 430.80, subdivision (a), which provides: "If the party against whom a complaint or cross-complaint has been filed fails to object to the pleading, either by demurrer or answer, that party is deemed to have waived the objection unless it is an objection that the court has no jurisdiction of the subject of the cause of action alleged in the pleading or an objection that the pleading does not state facts sufficient to constitute a cause of action."
In any event, our own analysis of the petition reveals that it alleges that: the Charities are each beneficiaries of 25 percent of the estate of the 2004 Trust, The Private Trust Company NA is the successor trustee to the 2004 trust, and Dimeff is the sole beneficiary of the 2008 Trust. Further, the petition seeks an order invalidating the 2008 Trust on various grounds, and specifically alleges, "if the Petition is granted, Petitioners will each be entitled to 25 % of the Trust assets." Construing the complaint liberally, we conclude that such allegations adequately allege facts sufficient to state a petition pursuant to section 850. (See § 850, subd. (a)(3) [stating that a "trustee or any interested person," may file a petition under section 850 et seq. "[w]here the trustee has a claim to real or personal property, title to or possession of which is held by another"].)
Accordingly, we conclude that the Charities' failure to specifically identify section 850 in their petition did not preclude the trial court from awarding twice the value of the property recovered and attorney fees pursuant to section 859.
4. Dimeff failed to establish any error with respect to the trial court's "bad faith" finding under section 859
Dimeff contends that the trial court "says [Dimeff] acted in bad faith because he knew the 2008 Trust would be invalidated (before the court did so) but as successor trustee [citation] distributed most of the funds to himself prior to the filing of the petition on December 6, 2010." Dimeff contends that this "cannot be bad faith as a matter of law" and argues that he acted properly in distributing the assets from the 2008 Trust to himself after Siv's death.
Dimeff's argument fails to address the actual basis for the trial court's bad faith finding. The trial court did not find that Dimeff had acted in bad faith merely by distributing the assets of the 2008 Trust to himself as successor trustee to the trust. Rather, the trial court found that Dimeff's conduct "falls within the parameters of section 859" because "[b]y means of undue influence committed against an elder, [Dimeff] in bad faith wrongfully took property belonging to a trust and attempted to conceal his actions from the Charities."
We have rejected Dimeff's argument that the trial court erred in finding that the 2008 Trust is invalid as a product of Dimeff's undue influence. (See pt. III.B, ante.) Further, in its second statement of decision, the trial court made numerous additional findings relevant to the trial court's finding in its first statement of decision that Dimeff "attempted to conceal his actions from the Charities." For example, the court found that Dimeff provided an "accounting for his activities relat[ed] to the assets of the [2004 and 2008 Trusts]," that was "unsupported by the financial documents . . . disclosed by [Dimeff]," and that was "riddled with errors." In addition, the trial court found that "[a]s a result of [Dimeff's] commingling of assets, the Court likewise could not ascertain whether many of the disbursements and distributions listed in his accounting were paid from sources originating from the Estate of Siv Ljungwe, the 2004 Trust, the 2008 . . . Trust, or some other source." Dimeff fails to address any of these findings in his briefing on appeal.
Accordingly, we conclude that Dimeff has failed to establish any error with respect to the trial court's "bad faith" finding under section 859. D. Dimeff has forfeited his remaining claims
Dimeff claims that there is not substantial evidence in the record to support the trial court's finding that he must repay the 2004 Trust $1,323,684.90. The law is well established that a party forfeits a substantial evidence challenge by failing to cite all of the evidence favorable to the judgment. (See, e.g., Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881 (Foreman & Clark Corp.) [substantial evidence review is forfeited if appellant fails to cite evidence favorable to the judgment].) After holding a multi-day trial, receiving numerous exhibits in evidence, and hearing extensive testimony, the trial court issued a 14-page statement of decision with numerous factual findings that provide the basis for the court's determination as to the amount of money that Dimeff was required to pay the Trust. Dimeff fails to make any attempt to summarize the evidence favorable to the judgment cited in the trial court's statement of decision or contained in the record generally. Accordingly, we conclude that Dimeff has forfeited his substantial evidence challenge to the trial court's finding that he must repay the 2004 Trust $1,323,684.90. (Ibid.)
Dimeff also argues that there is not "substantial evidence or supporting law" justifying the trial court's denial of various offsets and credits to which Dimeff claims he is entitled in determining the amount he must repay the 2004 Trust. While Dimeff asserts that he was "entitled to repayment of legitimate trust expenses made out of his accounts," he fails to discuss the evidence upon which the trial court found both that "[Dimeff] did not, and cannot, establish that the fees and costs incurred in defending himself and the 2008 . . . Trust benefited the 2004 Trust or were incurred in good faith," and that, "[Dimeff]'s payment of fees and costs from the Trust supported his role as a beneficiary and not as a trustee." Accordingly, to the extent that Dimeff raises a substantial evidence challenge to the denial of credits or offsets, the claim is forfeited. (See Foreman & Clark Corp., supra, 3 Cal.3d at p. 881.)
Dimeff also notes that the trial court denied the request for offsets and credits in part because the entitlement to offsets and credits were not pled. While Dimeff argues that in his response to the petition he "alleged his entitlement to use trust funds to defend the trust in the action brought by the Charities and to make the expenditures from the trust," he fails to make any meaningful legal argument or cite any authority demonstrating that his response to the Charities' petition adequately pled his entitlement to a credit or offset. In the absence of such argument or authority, we deem the contention forfeited. (See DP Pham LLC, supra, 246 Cal.App.4th at p. 674 [claims that are not supported by reasoned argument and citations to authority may be deemed forfeited].) E. The Charities' motion for sanctions is denied
The page of the response to the Charities' petition cited in Dimeff's brief did not clearly plead an entitlement to an offset or credit. The response stated in relevant part, "[Dimeff] asserts that he is entitled to use trust funds to defend the trust in this action and that [the Charities] are not entitled to an interim order to preclude [Dimeff] from using trust assets to defend the Trust."
While this appeal was pending, the Charities filed a motion for sanctions in which they argued that the appeal is frivolous and taken for purposes of delay. " '[A]n appeal should be held to be frivolous only when it is prosecuted for an improper motive—to harass the respondent or delay the effect of an adverse judgment—or when it indisputably has no merit—when any reasonable attorney would agree that the appeal is totally and completely without merit.' " (In re Reno (2012) 55 Cal.4th 428, 513, quoting In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650 (Flaherty), italics omitted.) We conclude that Dimeff's appeal is not so completely and totally without any possible merit such that it warrants the imposition of sanctions under Flaherty. We further conclude that the Charities have not established that the appeal was taken for purposes of delay so as to warrant the imposition of sanctions.
IV.
DISPOSITION
The judgment is affirmed. The Charities are entitled to costs on appeal.
AARON, J. WE CONCUR: HUFFMAN, Acting P. J. NARES, J.