Opinion
B228484
01-26-2012
STEVEN HANDELMAN et al., Plaintiffs and Appellants, v. MICHAEL HACKMAN et al., Defendants and Respondents.
James Ellis Arden for Plaintiffs and Appellants. Lewis Brisbois Bisgaard & Smith, Kenneth C. Feldman and Brian Slome for Defendants and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BC369819)
APPEAL from a judgment of the Superior Court of Los Angeles County, Rolf M. Treu, Judge. Affirmed.
James Ellis Arden for Plaintiffs and Appellants.
Lewis Brisbois Bisgaard & Smith, Kenneth C. Feldman and Brian Slome for Defendants and Respondents.
Steven Handelman, Larry Handelman, and Keri Ligerman (the Heirs), appeal from a judgment entered after the trial court granted summary judgment in favor of attorney Michael Hackman and his law firm Lewitt, Hackman, Shapiro, Marshall & Harlan APC (collectively, Hackman) on the Heir's legal malpractice complaint. Hackman prepared testamentary documents for the Heirs' mother, Paula Gavin (decedent) and her husband Delane M. Gavin (Gavin). The Heirs' second amended complaint (the complaint) alleges Hackman breached a duty owed to them as intended beneficiaries because the testamentary documents did not reflect the decedent's testamentary intent. The complaint further alleges Hackman breached a fiduciary duty of undivided loyalty owed to the decedent based upon his dual representation of the decedent and Gavin. Upon our de novo review, we resolve these legal questions by concluding, as the trial court did, that based upon Chang v. Lederman (2009) 172 Cal.App.4th 67 (Chang), Hackman did not owe a duty to the Heirs, and the Heirs have no standing to assert a cause of action for breach of a fiduciary duty. Summary judgment was properly granted, and we affirm.
The second amended complaint also names as plaintiffs the decedent's grandchildren, Alexandra, Gabriel, Madison, and Maxwell Handelman. The opening brief on appeal, however, was filed on behalf of the Heirs. Thus, the grandchildren are not parties to this appeal.
FACTUAL AND PROCEDURAL BACKGROUND
The Heirs concede the summary judgment motion raised two legal questions: (1) whether Hackman owed them a duty as intended beneficiaries; and (2) whether they have standing to assert a claim against Hackman for breach of a fiduciary duty owed to the decedent arising from a purported conflict in his dual representation. (Cabral v. Ralphs Grocery Co. (2011) 51 Cal.4th 764, 770-771 [existence of a legal duty is a question of law]; Great Lakes Construction, Inc. v. Burman (2010) 186 Cal.App.4th 1347, 1354 [standing is a legal question].) The following facts were undisputed.
1. The Delane M. and Paula Gavin Family Trust
The decedent and Gavin retained Hackman to prepare estate planning documents. They signed an attorney-client engagement letter, which addressed the possibility of a conflict of interest arising from the dual representation. The paragraph in the engagement letter entitled "dual representation," states: "[C]onflicts may arise between the two of you with respect to several issues, including the ownership of your property (separate, community or quasi-community property) and its desired disposition during your lifetimes and at your deaths. . . . [¶] [I]f conflicts do arise between the two of you of such nature that it is impossible in our judgment for us to perform our obligations to each of you in accordance with this letter, we will withdraw from all further dual representation of both of you in this matter at that time and advise one or both of you to obtain independent counsel."
The decedent and Gavin executed documents that Hackman prepared, creating the Delane M. and Paula Gavin Family Trust (the Trust). Under the terms of the Trust, upon the death of the first spouse, the trust estate would be divided into three separate trusts, respectively Trust A, Trust B, and Trust C.
Trust A, also known as the surviving spouse's trust, included the separate property of the surviving trustor (spouse), the survivor's interest in the community property, and the surviving spouse's interest in the personal property. The surviving spouse had a lifetime power of appointment of all or any part of Trust A, and upon his or her death, all the remaining principal and undistributed income in Trust A could be disposed of by will.
Trust B is a marital deduction trust, and despite appellants' arguments to the contrary, it is not at issue in this lawsuit because it is unrelated to the disposition of the decedent's separate property.
Trust C contained the remainder of the estate, including the decedent's separate property, and all of the decedent's community property. Trust C also provided for specific bequests to, among others, the decedent's family, including the Heirs, and Gavin's family, with the residue of the Trust left to the Heirs. Trust C did not list any specific bequests to the Handelman grandchildren.
Hackman also prepared "pour over" wills for the decedent and Gavin, which would be used at the death of the first spouse to place assets into the Trust.
2. Gavin Survived the Decedent and Hackman Prepared a New Will
Before the decedent died, Gavin met with Hackman to prepare a new will. Gavin executed the new will after the decedent's death. The new will disposed of the property in Trust A. It stated: "Under the provisions of paragraph 3.4.2 of Article III of the Trust, I have a general testamentary power of appointment over all of the principal and undistributed income of Trust A . . . . By this specific reference to said general testamentary power of appointment, I hereby exercise said general testamentary power of appointment as follows . . . ." By the terms of the new will, Gavin distributed the property in Trust A to his family.
Gavin died in 2007, and the property in Trust A was distributed according to Gavin's will. The Heirs filed probate proceedings against Gavin's family, which were ultimately settled. The Heirs then filed this action against Hackman.
3. Hackman's Motion for Summary Judgment Granted
Hackman moved for summary judgment on the complaint, which asserted causes of action for professional negligence and breach of fiduciary duty. The gravamen of the Heir's complaint, as they describe it, was that Hackman breached a duty of care owed to them as intended beneficiaries because the Trust thwarted the decedent's testamentary intent to distribute the property in Trust A to them. The complaint also alleged that Hackman's preparation of Gavin's new will, disposing of the property in Trust A, breached the fiduciary duty of undivided loyalty owed to the decedent and caused her intended bequests to fail.
To support the motion for summary judgment, Hackman cited Chang, supra, 172 Cal.App.4th 67, contending the professional negligence cause of action lacked merit because the Heirs could not establish he owed them a duty. Hackman also contended the Heirs lacked standing to assert a breach of a fiduciary duty owed to the decedent. (See DCH Health Services Corp. v. Waite (2002) 95 Cal.App.4th 829.)
The Heirs opposed the motion, contending Chang, supra, 172 Cal.App.4th 67, was inapposite because, unlike here, the attorney did not have a conflict of interest. The Heirs presented additional material facts, addressing the conflict of interest, and supported these facts with Steven Handelman's declaration. Hackman objected to portions of Handelman's declaration, and these objections were sustained.
The trial court granted the motion for summary judgment, concluding the professional negligence cause of action failed as a matter of law because Hackman owed no duty to the Heirs. The undisputed evidence established no conflict arose in Hackman's dual representation of the decedent and Gavin because Gavin's new will was consistent with the terms of Trust A. The trial court also concluded that even if a conflict arose when Hackman prepared Gavin's new will, the Heirs had no standing to assert a cause of action for a breach of the fiduciary duty owed to the decedent.
The Heirs filed this timely notice of appeal.
DISCUSSION
A motion for summary judgment is properly granted when "all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." (Code Civ. Proc., § 437c, subd. (c).) In making the determination that there is no triable issue as to any material fact, we consider "all of the evidence set forth in the papers, except that to which objections have been made and sustained by the court[.]" (Ibid; Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 334.) A defendant moving for summary judgment is entitled to judgment as a matter of law if the evidence shows one or more of the elements of the cause of action cannot be established, or the defendant has an affirmative defense to that cause of action. (Code Civ. Proc., § 437c, subd. (o)(1), (2); Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 849.) We review a grant of summary judgment de novo and decide independently whether the facts not subject to a triable dispute warrant judgment for the moving party as a matter of law. (Intel Corp. v. Hamidi (2003) 30 Cal.4th 1342, 1348.) The Heirs, however, concede this summary judgment motion raises legal questions based upon the parties' undisputed facts. Before addressing these legal questions, we consider the trial court's ruling on the evidentiary objections to Handelman's declaration.
The Heirs also advance the argument that summary judgment was improperly granted because Hackman's moving papers were insufficient as a matter of law. We reject this argument and related arguments to support this point. Additionally, in their reply brief, the Heirs contend the trial court erred by failing to grant a continuance under Code of Civil Procedure section 437c, subdivision (h). This issue was raised for the first time in the reply brief and is waived. (Julian v. Hartford Underwriters Ins. Co. (2005) 35 Cal.4th 747, 761, fn. 4.)
1. The Heirs Waived Their Right to Challenge the Evidentiary Rulings
Citing to the trial court's order granting the motion, the Heirs devote a two-sentence paragraph in their 36-page brief to the contention that the trial court erred in sustaining the objections to Handelman's declaration. California Rules of Court, rule 8.204(a)(1)(B) and (C) require parties to an appeal to "support each point by argument and, if possible, by citation of authority" and to "[s]upport any reference to a matter in the record by a citation to the volume and page number of the record where the matter appears."
The Heirs have not presented a cogent and reasoned argument with appropriate citations to the record to challenge the evidentiary rulings. It is not the Court of Appeal's job to make their case. Therefore, the Heirs have waived this issue on appeal. (Bullock v. Philip Morris USA, Inc. (2008) 159 Cal.App.4th 655, 685 ["appellant must affirmatively demonstrate error through reasoned argument, citation to the appellate record, and discussion of legal authority"]; People ex rel. Dept. of Alcoholic Beverage Control v. Miller Brewing Co. (2002) 104 Cal.App.4th 1189, 1200 ["appellant must present a factual analysis and legal authority on each point made or the argument may be deemed waived"].)
Despite the Heirs' waiver, we have independently reviewed the evidentiary objections to Handelman's declaration. The evidence to which objections were made supported eight additional facts the Heirs submitted in opposition to the summary judgment motion. Three of these additional "facts" are legal conclusions, and three others are undisputed. The objections to the two remaining facts were properly sustained, whether we engage in a de novo review or review the ruling for an abuse of discretion. (See Reid v. Google, Inc. (2010) 50 Cal.4th 512, 535.)
2. The Trial Court Properly Granted Summary Judgment
The Heirs contend the trial court legally erred in granting summary judgment by relying on Chang, supra, 172 Cal.App.4th 67, and by concluding as a matter of law that the Heirs did not have standing to assert a cause of action against Hackman for a breach of the fiduciary duty of undivided loyalty to his client. We find no legal error.
a. Hackman Did Not Owe a Duty to the Heirs
The Heirs' professional negligence cause of action is based upon the theory that the decedent did not intend Gavin to have the power to distribute her separate property into Trust A and thereafter distribute it to his relatives, but rather the decedent intended the property to be distributed to them. Thus, they maintain instead of fulfilling the decedent's testamentary intent, Hackman prepared documents, including Gavin's new will, which thwarted the decedent's testamentary intent.
During oral argument, the Heirs' counsel stated Gavin misappropriated the decedent's separate property and transferred it into Trust A. There was no admissible evidence presented that Gavin redirected the decedent's estate to Trust A, or that Hackman was involved.
To state a cause of action for legal malpractice, the Heirs, as intended beneficiaries, must plead and prove that Hackman owed them a duty. (Coscia v. McKenna & Cuneo (2001) 25 Cal.4th 1194, 1199; Chang, supra, 172 Cal.App.4th at p. 76.) Absent duty, there is no professional negligence. (Chang, at p. 76; Moore v. Anderson Zeigler Disharoon Gallagher & Gray (2003) 109 Cal.App.4th 1287, 1294.) Whether a duty is owed to an intended beneficiary depends upon the testamentary instrument (will or trust). (Lucas v. Hamm (1961) 56 Cal.2d 583, 591, 593; Chang, at pp. 82-86.)
The California Supreme Court has recognized an attorney may be liable to testamentary beneficiaries if (1) the attorney's professional negligence frustrates the testamentary intent in a legal instrument, and (2) the beneficiaries lose their legacy as a direct result of the negligence. (Lucas v. Hamm, supra, 56 Cal.2d at pp. 591-593; Hall v. Kalfayan (2010) 190 Cal.App.4th 927, 933-937.) In Lucas v. Hamm, for example, the attorney's professional negligence in failing to consider that the bequest violated the rule against perpetuities and statutory restraints on alienation caused the beneficiaries to lose their legacy. (Lucas v. Hamm, at pp. 587, 592; see also Chang, supra, 172 Cal.App.4th at p. 82 [compiling cases].) Like Lucas v. Hamm, the other cases the Heirs cite for the proposition that Hackman owed them a duty are examples of failed express bequests to an expressly named beneficiary. (Heyer v. Flaig (1969) 70 Cal.2d 223, 229-230, disapproved on other grounds in Laird v. Blacker (1992) 2 Cal.4th 606, 617 [bequest to daughters failed because attorney did not provide for effect of post-testamentary marriage]; Biakanja v. Irving (1958) 49 Cal.2d 647, 648, 650-651 [bequest failed because of improper attestation]; Osornio v. Weingarten (2004) 124 Cal.App.4th 304, 313, 330-338 [bequest to caregiver failed because there was no certificate of independent review]; Bucquet v. Livingston (1976) 57 Cal.App.3d 914, 921-924 [failure of the marital deduction trust].)
The Heirs also inexplicably cite Furniss v. Rennick (Ill.Ct.App. 1997) 676 N.E.2d 8, affirmed by the Illinois Supreme Court (In re Estate of Rennick (Ill. 1998) 692 N.E.2d 1150, 1152, 1155-1156), which addresses whether an attorney's admissions in a discovery deposition can be used as evidence against his estate in a legal malpractice action.
When a claim, however, is that a testamentary instrument (will or trust), although properly executed and free of other legal defects, did not accurately express the testator's intent, no duty or liability to the potential beneficiary exists. (Chang, supra, 172 Cal.App.4th at pp. 82-86.) In Chang, an expressly named beneficiary attempted to assert a legal malpractice claim based upon an allegation that the testator had intended to revise his estate plan to increase her bequest and would have done so but for the attorney's negligence. (Id. at pp. 74, 85-86.) The Chang court concluded that the attorney did not owe a duty to the intended beneficiary. (Id. at p. 86.) In reaching this conclusion, the Chang court reasoned that extending the duty "to include actual beneficiaries who could have been, but were not, named in a revised estate plan . . . would expose attorneys to impossible duties and limitless liability because the interests of such potential beneficiaries are always in conflict." (Ibid.) This type of claim also is speculative because it arises after the testator died, and he or she is the only person who can say what he or she intended. (Ibid.)
Here, the Heirs' professional negligence claim, like Chang's, is based upon a duty Hackman owed to them, not as an expressly named beneficiary whose actual bequest was improperly perfected, but based upon an allegation that the decedent had intended a different bequest. We find the Heirs' attempt to distinguish Chang, supra, 172 Cal.App.4th 67, by focusing on the conflict of interest, inapposite. The Heirs' lawsuit is based upon their belief that the decedent intended a different bequest than the one set forth in the testamentary documents. Just as in Chang, the duty Hackman owed to the decedent cannot be extended to the Heirs because it would expose Hackman to impossible duties and limitless liability to potential beneficiaries. The Heirs' claim also is speculative because only the decedent can say what she intended and explain why her previously announced intentions were modified in the testamentary documents she executed. Under the circumstances of this case, we follow Chang, and conclude Hackman did not owe the Heirs a duty. (Id. at p. 86.) Thus, absent the key element of duty, the Heirs' professional negligence cause of action fails as a matter of law.
The Heirs also appear to contend the trial court's prior order overruling Hackman's demurrer to the complaint on the same ground precluded him from raising the issue on summary judgment. An order overruling a demurrer has no preclusive effect.
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b. The Heirs Have No Standing to Assert a Cause of Action for Breach of the Fiduciary Duty Owed to the Decedent
The Heirs' cause of action for breach of fiduciary duty is based upon Hackman's preparation of Gavin's new will, which they maintain conflicts with the testamentary documents Hackman prepared for the decedent and Gavin. In preparing Gavin's new will, Hackman allegedly violated the fiduciary duty of undivided loyalty he owed to the decedent. Thus, this cause of action is premised on an inconsistency between the testamentary documents the decedent executed (the Trust and the pour-over wills) and Gavin's new will. The new will disposed of the property in Trust A. Under the terms of the Trust, Trust A consisted of the separate property of the surviving spouse (Gavin) and his interest in the community property and personal property. By the terms of the Trust, Hackman prepared a new will that is consistent with the testamentary documents that the decedent executed. Hackman did not redirect the decedent's assets in any manner contrary to the Trust. In any event, since Hackman did not owe the Heirs a fiduciary duty, this cause of action fails as a matter of law. (See DCH Health Services Corp. v. Waite, supra, 95 Cal.App.4th 829, 832.)
The Heirs concede Hackman did not owe them a fiduciary duty, but they contend they are entitled to recover damages for Hackman's breach of the duty of loyalty owed to the decedent. The Heirs maintain they suffered harm by losing their inheritance that Gavin misappropriated following the execution of his new will. In support of this contention, the Heirs submitted an additional material fact that states: "The new estate planning documents which the defendants prepared for Mike Gavin redirected the entirety of Paula's and his estate to 'Trust A,' and then to Mike Gavin's two sisters and niece; with none of Paula Gavin's separate, community or other property going to any of the plaintiffs." Objections were sustained to Handelman's declaration supporting this fact, and the only other evidence submitted was Gavin's new will, which is consistent with the Trust.
Summary judgment was properly granted.
DISPOSITION
The judgment is affirmed. Each party to bear its own costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
ALDRICH, J. We concur:
KLEIN, P. J.
KITCHING, J.