Opinion
G062252
08-12-2024
KATHLEEN LES, Plaintiff and Appellant, v. MARK S. LES, Individually and as Trustee, etc., Defendant and Respondent.
Boutin Jones, Michael E. Chase, Stacey K. Brennan, and Kelley M. Lincoln for Plaintiff and Appellant. Palmieri, Tyler, Wiener, Wilhelm & Waldron, Don Fisher; Palmieri, Hennessey & Leifer and Elise M. Kern for Defendant and Respondent.
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Orange County, No. 30-2020-01144673 Aaron W. Heisler, Temporary Judge. (Pursuant to Cal. Const., art. VI, § 21.) Affirmed.
Boutin Jones, Michael E. Chase, Stacey K. Brennan, and Kelley M. Lincoln for Plaintiff and Appellant.
Palmieri, Tyler, Wiener, Wilhelm & Waldron, Don Fisher; Palmieri, Hennessey & Leifer and Elise M. Kern for Defendant and Respondent.
OPINION
GOETHALS, ACTING P. J.
In this family dispute, Kathleen Les sued her brother, Mark Les, seeking to either invalidate the sale by their mother, Frances, of her interest in a family partnership to Mark, or to impose a constructive trust. Kathleen argued that (1) Frances lacked capacity to enter into the agreement by which her partnership interest was sold to Mark, and (2) Frances's agreement was the product of Mark's undue influence. The trial court rejected both theories, concluding that under any standard of review, Frances had the capacity to enter into and understand the nuances of her agreement with Mark and that even assuming undue influence was legally presumed due to Mark's status as Frances's partner, Mark had overcome that presumption.
Both of the parties, Kathleen and Mark, and their late mother, Frances, share the same last name. We refer to each of them by their first name for the purpose of clarity. No disrespect is intended.
Kathleen contends the court's judgment must be reversed because it applied the wrong legal standards in its determination of capacity and undue influence, and because the evidence was insufficient to support its findings regarding undue influence and Mark's compliance with his fiduciary duties. We disagree and therefore affirm.
The trial court produced a detailed statement of decision in which it explained the basis for its judgment. If Kathleen believed the court's legal analysis was internally inconsistent, incomplete, or ambiguous, she was obligated to make her objection in the trial court, giving it the opportunity to address her objections and correct its decision. In the absence of such objections, we will presume the court applied the law correctly and we will infer all findings necessary to support its decision.
Although Kathleen preserved her right to challenge the sufficiency of the evidence to support the court's factual findings, her attempts to do that also fail. While her statement of facts reflects that Kathleen understands her obligation to summarize all the evidence, both favorable and unfavorable, pertaining to the findings she challenges, her argument fails to address the favorable evidence or to explain why that evidence is insufficient to support the court's findings. Instead, Kathleen's arguments ask us to focus on only the evidence she relied upon and to conclude that her evidence is so compelling the court erred by not finding in her favor instead. We decline to do so as that would violate well-established appellate protocols.
FACTS
We take our facts from the trial court's statement of decision. While Kathleen challenges the sufficiency of the evidence to support some of the court's conclusions, she does not dispute any of the evidentiary facts it recites.
Frances and her late husband, Mark Sr., were married for over 41 years. They had two children, Kathleen and Mark, and three grandchildren. Frances and Mark Sr. enjoyed considerable business success, including with the Mesa Verde Plaza shopping center ("MVP" or "the center"), located in Costa Mesa. At the time of Mark Sr.'s death in 1990, he co-owned MVP in a 50% partnership with another man and Frances inherited Mark Sr.'s 50% share in the partnership.
Following Mark Sr.'s death, and at Frances's direction, Mark negotiated a buyout of his partner's 50% ownership interest in the center. When that transaction was completed, Frances retained her 50% interest in the partnership, and Mark and Kathleen each owned 25%.
In May 1994, Frances executed the Frances Les Trust dated May 4, 1994 (the Trust) and transferred her 50% interest in the partnership into the Trust. In October 1995, Frances (as trustee of the Trust), Kathleen and Mark executed an amendment to and restatement of partnership agreement confirming their respective ownership interests. That amendment and restatement agreement also specified that the partnership would be dissolved in 20 years, and its assets liquidated to cash, unless the parties agreed otherwise.
Following Mark Sr.'s death, Mark stepped into his father's shoes to manage the center. Neither Frances nor Kathleen had any significant involvement in the management, and neither asked for any. It is undisputed that Mark did an excellent job managing the center and its profits increased significantly. Both Frances and Kathleen benefitted financially from Mark's efforts.
The family business relationships remained amicable for many years. While there were no formal partnership meetings, Mark provided Frances and Kathleen with monthly written updates addressing the partnership information and events he believed were significant.
Things changed in 2005 when Mark's update revealed he was pursuing an updated valuation of the partnership in connection with a planned gift of a 25% partnership interest from Frances to him. As Mark explained, the gift was anticipated as progress toward two longer-term goals: First, to have ownership of the center ultimately be divided 2/3 to Mark and 1/3 to Kathleen, so that the center would later be owned in equal shares by the three grandchildren. Second, to get the center out of Frances's estate to avoid future problems with the IRS and to avoid paying estate taxes on future appreciation. Mark suggested that one way to achieve that would be to "one day buy out a substantial portion" of Frances's remaining interest.
Mark's news did not sit well with Kathleen, who had been told by Frances that she and Mark would each receive one-half of Frances's interest in the partnership following her death. Kathleen let Mark know that she expected MVP would be sold at some point-a goal consistent with the 20-year mandatory dissolution provision in the amended partnership agreement-and that she wished to use her share of the sale price for other investment opportunities and to fund her retirement. Mark was opposed to selling the center as he wanted it to stay in the family for the long-term. Their disagreement became contentious, and it represented a significant turning point in the fate of the partnership.
In the years that followed, Kathleen, Mark, and Frances regularly discussed the future of the center and their partnership. Their conversations took place in person, by telephone, and over e-mail; they were frequently contentious-especially those involving only Kathleen and Mark. In general, Mark wanted to ensure the center would not be sold without his consent, while Kathleen wanted liquidity and financial freedom from the partnership. Mark also wanted financial recognition for his management of the center and his substantial contributions to its value following Mark Sr.'s death. Frances wanted both of her children to be happy and to resolve their conflict. When Kathleen and Mark separately communicated with Frances about their conflicts, Kathleen tended to be more imploring and emotional, while Mark was more verbally aggressive and demanding.
In May 2007, Kathleen agreed in principle to sell her 25% interest in the partnership to Mark for $2 million. But Mark had difficulties securing financing terms he found acceptable, and he and Kathleen continued to negotiate. Eventually, in July 2008, Mark and Kathleen finalized and executed purchase and sale documents reflecting a sale of Kathleen's interest to Mark in exchange for a $1.5 million promissory note, payable over 30 years and secured by the 25% partnership interest.
Although not mentioned in the court's statement of decision, there is evidence that Mark sweetened the $1.5 million purchase price with an additional $200,000 "down payment" because Frances had decided to make cash gifts in that amount to each Kathleen and Mark at the end of 2007. Mark proposed, in a letter to both Frances and Kathleen, that he could add his $200,000 gift to the $1.5 million promissory note at 6% interest. This suggests the price Mark paid for Kathleen's partnership interest was effectively $1.7 million, rather than the $1.5 million price reflected in the sale agreement.
While Kathleen's sale of her interest to Mark was a relief for all, the relief was short-lived. Kathleen had understood that selling her interest to Mark meant Frances would not change her estate plan and that Kathleen would still inherit half of the Trust's interest in the partnership when Frances passed away. But Frances did not share that understanding. Instead, on October 3, 2008, Frances told Kathleen that she planned to sell some or all of the Trust's partnership interest to Mark. She explained to Kathleen that doing so would allow for tax savings, among other things.
Kathleen reacted by going into another emotional tailspin, sharing her feelings of betrayal with Frances, who was defensive. Frances then softened her position and suggested to Kathleen that things were not yet decided.
But unbeknownst to Kathleen, Frances had already handwritten and signed a document entitled '"Amendment to Frances Les Trust' (the Holographic Amendment)" in January 2008, nearly six months before Kathleen's sale of her partnership interest to Mark was finalized. The Holographic Amendment stated, "My 50% interest in Mesa Verde Plaza shall be allocated to Mark Stephen Les."
Shortly after Frances's October 3 conversation with Kathleen, she again confirmed to Kathleen that her intention was for Mark to control MVP, either as part of a buyout or after her death.
On October 10, 2008, a week after that conversation, Frances went with Mark to visit the law firm of Palmieri, Tyler, Wiener, Wilhelm &Waldron, LLP. Once there, Frances met privately with attorneys from the firm's estate planning department, before executing a series of documents the attorneys had prepared at Mark's direction. The documents included a purchase and sale agreement under which Mark purchased Frances's 50% interest in the partnership for about $3 million, secured by a 30-year promissory note at 4.32% interest.
Frances also executed some estate documents, including an amendment to the Trust, a document designating Mark as having her power of attorney, and an advanced healthcare directive designating Kathleen as the person to make decisions for her.
As a consequence of the execution of those documents, Mark became the 100% owner of the partnership and MVP. Frances received the right to monthly payments for the remainder of her life, with any unpaid balance on Mark's promissory note distributed to him upon her death. Effectively, Mark's remaining obligation under the promissory note would be forgiven when Frances died.
Frances died in November 2019, 11 years after she signed the documents selling her 50% interest in the partnership to Mark. By that point, Mark had paid Frances approximately $1.8 million toward the promissory note that secured his purchase of her interest. Mark succeeded Frances as the trustee of the Trust.
In May 2020, Kathleen filed a petition seeking to invalidate the October 10, 2008 purchase and sale agreement and the Trust amendment Frances executed on that same date. Kathleen's petition also challenged the validity of the Holographic Amendment. Kathleen argued that the challenged documents were the product of Mark's undue influence and that Frances had lacked the requisite capacity to execute them. Kathleen did not seek relief based on a theory of breach of fiduciary duty; rather she argued Mark had a "confidential relationship" with Frances and that, because he actively participated in procuring the challenged documents and he unduly benefitted from them, the burden shifted to him to prove the documents were not procured through undue influence.
The court's statement of decision did not address Kathleen's challenge to the validity of the Holographic Amendment, explaining that Frances's execution of the October 10, 2008 Trust amendment superseded that document. The court stated it considered the Holographic Amendment relevant as a "written expression of Frances's testamentary intentions as of early 2008."
The trial spanned from March-May 2022. Each side called witnesses, including retained experts to support their differing views of Frances's mental capacity and emotional strength during the relevant time period.
In its statement of decision, the court explained in detail why it found Mark's retained expert to be more persuasive and credible than the expert retained by Kathleen. The court observed that Kathleen's characterization of Frances as mentally fragile "stands in stark contrast to the picture of a strong-willed, capable, intelligent woman credibly painted by others who knew and interacted closely with Frances before and after she executed the [d]ocuments at [i]ssue. Kath[leen]'s image of Frances is also belied by Frances' own words, preserved in copious emails and Kath[leen]'s own notes of oral conversations between the two. Frances was a woman who knew her own mind, her own strengths and limitations, and what she wanted for herself and her children. She was free and able at all relevant times to communicate and consult with who[m]ever she wanted."
The court also concluded the challenged documents "did not produce an inequitable result" because Frances had spent nearly two years with her children struggling over the future of the shopping center. While Frances rarely took sides during three-way conversations, she expressed her own beliefs when talking to each privately. Frances believed Mark deserved a greater share of the partnership because of all his hard work and success in building its value over the years. She wanted him to continue to own and operate it for the foreseeable future. She expressed that view to Mark in direct terms, but while she employed "softer language" to Kathleen, Frances's message was nonetheless clear and consistent.
The court found that Frances's dismay and frustration with the ongoing conflict were what caused her to secretly write the Holographic Amendment, intending to give Mark her entire share in the partnership upon her death. When Mark later proposed a buyout of Frances's interest instead, she agreed to a sale on terms that gave her adequate monthly income for the remainder of her life.
Thus, the court concluded Frances's decision to change her estate plan and to deviate significantly from her prior intent to divide her interest in the partnership equally between Mark and Kathleen was a decision Frances made of her own free will, and without undue influence.
Explaining its legal reasoning, the court first addressed Kathleen's claim of undue influence. The court set forth the statutory factors used to assess undue influence and then explained that even if it assumed Kathleen had successfully established that the common law presumption of undue influence should be applied-thus shifting the burden to Mark to prove the lack of undue influence-the evidence was sufficient to satisfy Mark's burden. The court relied primarily on its determinations that (1) "Frances was not particularly vulnerable to undue influence at any relevant time," and (2) the challenged documents "did not produce an inequitable result" because Frances believed Mark deserved a greater share of the partnership because of his hard work and dedication and because she supported his desire to continue owning and operating MVP for the foreseeable future.
With respect to the claim that Frances lacked capacity to execute the challenged documents, the court assumed, as Kathleen contended, Frances required "the highest level of capacity to execute each of the [d]ocuments at [i]ssue." But the court then found "there is no credible evidence establishing that she was experiencing a deficit in [] one or more of the mental functions specified in Probate Code section 811, subdivision (a), when she executed any of the [d]ocuments at [i]ssue, or that any deficit significantly impaired France[s]'s ability to understand and appreciate the consequences of her actions in executing those documents."
Kathleen filed objections to the court's original proposed statement of decision; after reviewing her objections, the court gave Mark an opportunity to respond. The court then concluded no hearing was necessary to resolve Kathleen's objections and instead issued a final statement of decision which "clarif[ied] some of the specific findings ...."
DISCUSSION
I.
STANDARD OF REVIEW
As in all appeals, we begin by presuming the trial court's judgment is correct; it is the appellant's burden to affirmatively establish error. "A judgment or order of a lower court is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of its correctness." (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133 (Arceneaux).) More specifically, "[a]s a general rule '"a trial court is presumed to have been aware of and followed the applicable law."'" (People v. Tilley (2023) 92 Cal.App.5th 772, 780.) Moreover, "[u]nder the doctrine of implied findings, the reviewing court must infer, following a bench trial, that the trial court impliedly made every factual finding necessary to support its decision." (Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 48.)
When the court issues a statement of decision, revealing the specific factual findings and legal reasoning behind its decision, it may allow an appellant to "avoid application of these inferences in favor of the judgment." (Arceneaux, supra, 51 Cal.3d at p. 1133.) In order to avoid those inferences, however, "the party must state any objection [he may have] to the statement" in the trial court, giving the court the opportunity to correct the perceived problem. (Ibid.) "[I]f a party does not bring such deficiencies to the trial court's attention, [he] waives [his] right to claim on appeal that the statement was deficient in these regards, and hence the appellate court will imply findings to support the judgment." (Id. at pp. 1133-1134; Code Civ. Proc., § 634.)
Code of Civil Procedure section 634 states that "When a statement of decision does not resolve a controverted issue, or if the statement is ambiguous and the record shows that the omission or ambiguity was brought to the attention of the trial court either prior to entry of judgment or in conjunction with a motion under Section 657 or 663, it shall not be inferred on appeal or upon a motion under Section 657 or 663 that the trial court decided in favor of the prevailing party as to those facts or on that issue."
The requirement that a litigant first raise a claim of deficiency in the trial court exists because "it would be unfair to allow counsel to lull the trial court and opposing counsel into believing the statement of decision was acceptable, and thereafter to take advantage of an error on appeal although it could have been corrected at trial." (Arceneaux, supra, 51 Cal.3d at p. 1138.)
"In reviewing a judgment based upon a statement of decision following a bench trial, we review questions of law de novo. [Citation.] We apply a substantial evidence standard of review to the trial court's findings of fact. [Citation.] Under this deferential standard of review, findings of fact are liberally construed to support the judgment and we consider the evidence in the light most favorable to the prevailing party, drawing all reasonable inferences in support of the findings." (Thompson v. Asimos (2016) 6 Cal.App.5th 970, 981.)
When a party challenges the sufficiency of the evidence to support a factual determination in the trial court, we "'must presume that the record contains evidence to support every finding of fact ....'" (In re Marriage of Fink (1979) 25 Cal.3d 877, 887.) "It is the appellant's burden, not the court's, to identify and establish deficiencies in the evidence. [Citation.] This burden is a 'daunting' one. [Citation.] 'A party who challenges the sufficiency of the evidence to support a particular finding must summarize the evidence on that point, favorable and unfavorable, and show how and why it is insufficient."' (Huong Que, Inc. v. Luu (2007) 150 Cal.App.4th 400, 409.)
II.
STANDARD APPLIED BY COURT IN DETERMINING CAPACITY
Kathleen first contends the court erred by failing to apply the "contractual capacity" standard she claims is set forth in Probate Code section 812, in determining whether Frances had the capacity to assent to the challenged documents transferring her interest in MVP to Mark.
While Kathleen acknowledges the court's decision reflects an assumption that the "highest level of capacity" was required to execute the documents, she argues the fact the court's decision cites to only the elements of Probate Code section 811, while ignoring the "findings required under section 812," reflects the court did not actually apply that higher standard reflected in section 812. There are several flaws in this argument, and we reject it.
First, as we have already explained, the court was not required to include particular findings in its statement of decision. All necessary findings to support a court's decision are presumed to have been made, and unless a party has requested specific findings to resolve a contested issue, or formally objected to their absence in a proposed statement of decision, it cannot complain of the omission on appeal. Instead, on appeal we infer those findings were made. (Arceneaux, supra, 51 Cal.3d at pp. 1133-1134; Code Civ. Proc., § 634.)
Consistent with that standard, the trial court affirmatively disclosed that its statement of decision did not include "exhaustive citations of all legal authority . . . supporting those findings" and that "[t]he absence of a citation to legal authority" "should not be understood to mean that those findings are unsupported by legal authority."
In this case, the trial court did issue a proposed statement of decision for the parties to consider. And that proposed statement included the same analysis of the capacity issue that Kathleen now claims is insufficient to demonstrate a proper analysis of Frances's "contractual capacity." And although Kathleen did file formal objections to the proposed statement, she did not object on the basis that it omitted an analysis of what she now claims were required findings under Probate Code section 812. Kathleen consequently waived that contention for purposes of appeal. We presume the court analyzed Frances's capacity in accordance with the highest standards applicable to the issue, just as its statement of decision says it did.
The second flaw suggested in Kathleen's argument is that Probate Code sections 811 and 812 do not govern separate testamentary and contractual capacity standards. We disagree. Section 811 states: "A determination that a person is of unsound mind or lacks the capacity to make a decision or do a certain act, including, but not limited to, the incapacity to contract, to make a conveyance, to marry, to make medical decisions, to execute wills, or to execute trusts, shall be supported by evidence of a deficit in at least one of the following mental functions, subject to subdivision (b), and evidence of a correlation between the deficit or deficits and the decision or acts in question." (Prob. Code, § 811, subd. (a), italics added.) The statute then lists the type of deficits that must be found to support a determination of unsound mind or incapacity.
Probate Code section 811, subdivision (b), makes clear that even when the court finds a person suffers from one or more of the listed deficits, that does not end the inquiry. Instead, the court must additionally find that "the deficit, by itself or in combination with one or more other mental function deficits, significantly impairs the person's ability to understand and appreciate the consequences of his or her actions with regard to the type of act or decision in question." (Prob. Code, § 811, subd. (b), italics added.) In other words, Probate Code section 811 requires the court to not only find that a deficit exists, but also to determine it amounts to a significant impairment in the context of the particular act or decision at issue. Only when both are true can the court find incapacity.
Thus, when the court here made a specific finding that Frances was not suffering from any of the deficits listed in Probate Code section 811 at the time she executed the challenged documents, its required inquiry was over. Absent a finding of deficit, there can be no finding of incapacity.
Probate Code section 812, the statute Kathleen focuses on, does not establish any separate rule for contracts. Like Probate Code section 811, section 812 applies to all types of "decisions." In addition to focusing on a person's ability to communicate, section 812 expands on subdivision (b) of Probate Code section 811, which requires the court to address the person's ability to understand the consequences of a particular challenged decision: "[e]xcept where otherwise provided by law . . ., a person lacks the capacity to make a decision unless the person has the ability to communicate verbally, or by any other means, the decision, and to understand and appreciate, to the extent relevant, all of the following: [¶] (a) The rights, duties, and responsibilities created by, or affected by the decision. [¶] (b) The probable consequences for the decisionmaker and, where appropriate, the persons affected by the decision. [¶] (c) The significant risks, benefits, and reasonable alternatives involved in the decision." (Prob. Code, § 812.)
Thus, Probate Code section 812 is a complement to section 811. Taken together, they require that, where one or more deficits exist, a court's analysis of incapacity must take into consideration the complexity of the transaction at issue. As explained in In re Marriage of Greenway (2013) 217 Cal.App.4th 628, 639, "the determination of a person's mental capacity is fact specific, and the level of required mental capacity changes depending on the issue at hand." Thus, rather than the creation of distinct statutory standards for testamentary versus contractual capacity, "the required level of understanding depends entirely on the complexity of the decision being made." (Id. at p. 641.)
In any event, even if the court had been required to separately address the standards in Probate Code section 812, we would conclude it did so adequately. The court specifically found that Frances had the capacity to understand "all the nuances of the October 2008 transaction" in which she sold her interest in the partnership to Mark. That finding while not expressed in the exact language of Probate Code section 812 is sufficient to demonstrate compliance with its standards.
III.
STANDARD APPLIED BY COURT IN DETERMINING UNDUE INFLUENCE
Kathleen next argues that the court erred by applying the wrong standard in analyzing whether Mark had offered sufficient evidence to overcome the presumption of undue influence. Specifically, she claims Mark's status as Frances's partner in ownership of the center made him her fiduciary and that relationship created "a more stringent presumption the documents were the product of undue influence" than the "common law" presumption relied upon by the court in its statement of decision.
As the court explained in its statement of decision, the "common law presumption of undue influence arises when a party proves all of the following by a preponderance of the evidence: (1) the existence of a confidential relationship between the testator and the person alleged to have exerted undue influence; (2) active participation by such person in the actual preparation or execution of the challenged instrument . . . and (3) undue profit accruing to that person by virtue of the instrument."
Kathleen argues that as Frances's fiduciary, Mark had an affirmative obligation to "provide [her with] full disclosure of all material facts within his knowledge" relating to her transfer to him of her interest in the center. Kathleen contends Mark's failure to do so constitutes a fraud, and that as a consequence the court was obligated to "focus[] on Mark's conduct as well as Mark's resulting benefit compared to Frances' resulting detriment" in assessing whether he had overcome the presumption of undue influence.
If Kathleen believed the undue influence issue could not be properly resolved in Mark's favor unless the court first applied a more stringent presumption arising out of Mark's status as a fiduciary, it was incumbent on her to make that point in her objections to the trial court's proposed statement of decision. She did not. Her failure to do so waived the issue for purposes of appeal. (Arceneaux, supra, 51 Cal.3d at pp. 1133-1134; Code Civ. Proc., § 634.)
In any event, the assertion is not persuasive on the merits. First, Kathleen relies on Hudson v. Foster (2021) 68 Cal.App.5th 640, 666 (Hudson), for the proposition that Mark's status as Kathleen's fiduciary created a more stringent presumption of undue influence than did the "common law" presumption-which is grounded on the existence of a mere "confidential" relationship-and thus the court set the bar too low for Mark.
But Hudson is an extrinsic fraud case, not an undue influence case. The case does not stand for the proposition that a fiduciary relationship imposes a more stringent standard than a confidential relationship would. Hudson says the two terms are legally interchangeable: "'Fiduciary' and 'confidential' have been used interchangeably to describe a relationship in which one party has a duty to act in the highest good faith for the benefit of the other party." (Hudson, supra, 68 Cal.App.5th at p. 663.)
Kathleen's argument also fails because the court did focus on the issues Kathleen claims it needed to; it just addressed them in different parts of its statement of decision. Specifically, the court acknowledged Kathleen had requested the imposition of a constructive trust based on Mark's alleged breaches of fiduciary duty. After expressing doubt that Kathleen had properly presented a claim for breach of fiduciary duty, the court stated, "The credible evidence admitted at trial establishes to the court's satisfaction that Mark did not conceal from Frances, or fail to disclose to her, any material fact in connection with his negotiations and/or Mark's subsequent purchase from Frances of the Trust's Partnership Interest."
Kathleen's suggestion that the court failed to consider "Mark's resulting benefit compared to Frances' resulting detriment" ignores what was essentially the trial court's core finding. In the court's view, this transaction was not a zero-sum game, in which any benefit gained by Mark equated to a detriment to Frances. Frances believed Mark "deserved a greater share of MVP" because of his hard work and dedication, and she supported his "desire to continue owning and operating MVP for the foreseeable future." Based on the Holographic Amendment, the court believed Frances was prepared to give Mark her share of the center.
"Merriam-Webster defines the term 'zero-sum game' to mean a 'situation in which one person or group can win something only by causing another person or group to lose it . . . . Dividing up the budget is a zero-sum game.'" (Plantier v. Ramona Municipal Water Dist. (2017) 12 Cal.App.5th 856, 870, fn. 12.)
Thus, when Frances instead transferred her 50% share of the center to Mark in a sale transaction, the court believed Frances was furthering her own interest in ensuring Mark would become the owner of that share; she was not concerned about extracting the best possible price. It is for that reason the court concluded the sale transaction was not inequitable. That view of the dynamics, coupled with the court's assessment that Frances knew her own mind and had the capacity to understand the effects of her decisions, obviated the need for the court to engage in the zerosum game analysis Kathleen now advocates.
A. Sufficiency of the Evidence to Support Finding that Mark Overcame Presumption of Undue Influence
Kathleen also argues there is insufficient evidence, even under the common law standard applied by the court, to overcome the presumption of undue influence. She relies on Gaines v. California Trust Co. (1941) 48 Cal.App.2d 709, 713 (Gaines). The case is distinguishable on the facts and legally inapposite as the law has changed. As Kathleen acknowledges, the trial court in Gaines made specific findings that when a wife signed away rights to inherit under the terms of her husband's will, she did not understand the nature of community property or her rights to it, she did not know the extent of her husband's estate, and she was not familiar with business practices or customs. The couple had a custom of the wife signing whatever the husband asked her to, and the husband "did not explain to her the nature and extent of her act in signing the waiver." (Ibid.) No such findings were made here.
Despite all those findings, the trial court in Gaines concluded the husband's estate had overcome the then-existing statutory presumption of undue influence between spouses because the wife had received consideration for her waiver. So the appellate court determined there was insufficient evidence to support that finding of consideration and therefore reversed the judgment because there was no remaining basis to overcome the presumption of marital undue influence under then-applicable law.
The reasoning in Gaines has no application here because the trial court properly determined that Mark had overcome the presumption of undue influence by considering the factors now required by Welfare and Institutions Code section 15610.70, subdivision (a): i.e., (1) "The vulnerability of the victim"; (2) "The influencer's apparent authority"; (3) "The actions or tactics used by the influencer"; and (4) "The equity of the result." (Welf. &Inst. Code, § 15610.70, subd. (a)(1)-(4).) The court explained it found the first and the fourth of the statutory factors to be "especially significant," i.e., that "Frances was not particularly vulnerable to undue influence," and that the documents "did not produce an inequitable result."
Kathleen attempts to persuade us the evidence is sufficient to support a contrary finding; e.g., she argues "[s]ufficient evidence contradicts the trial court's finding that Frances was not vulnerable to undue influence." She also argues there is evidence that Mark had apparent authority over Frances and that his tactics overcame her free will. But as explained in Bowers v. Bernards (1984) 150 Cal.App.3d 870, 874: "it is of no consequence that the trial court believing other evidence, or drawing other reasonable inferences, might have reached a contrary conclusion." We do not reweigh the evidence or re-evaluate witness credibility. In order to obtain a reversal of the judgment based on the insufficiency of the evidence, Kathleen is required to convince us there was no substantial evidence in the record to support the findings made by the trial court. She has failed to do so.
In Kathleen's statement of facts, she acknowledges Mark presented evidence from witnesses who attested to how strong-minded Frances was, that Mark did not try to control his interactions with her, did not isolate her, intimidate her, or attempt to frighten her. That evidence was sufficient to uphold the court's ruling.
Kathleen devotes a significant portion of her opening brief to discuss how this case compares with Key v. Tyler (2019) 34 Cal.App.5th 505, which she portrays as "eerily similar" to the situation here. But while the facts found to be true in Key are similar to the scenario Kathleen claimed to have occurred in this case, the case does not help her since the trial court here did not make similar findings.
Kathleen argues the $3 million price Mark agreed to pay to Frances for her 50% share of MVP was a steep discount from what Frances's interest in MVP was worth because Mark had paid Kathleen $1.9 million for her 25% interest (consisting of a $1.5 million promissory note from Mark plus a $400,000 "gift" that Frances had given to Mark for use as the "downpayment" for his purchase of Kathleen's interest.) And in light of that true price paid for Kathleen's share, Mark assertedly misrepresented to Frances that by paying $3 million, he would "buy your shares at the same price as Kath[leen]."
As Kathleen notes in her opening brief, Frances had decided to give a "generous[]" cash gift to both Mark and Kathleen, and Mark apparently used his as a "downpayment" for Kathleen's interest in MVP.
Kathleen's assertions about whether the price Mark paid to Frances fully compensated her for the market value of her shares, or whether the terms of his payment were unduly favorable to him, miss the point of the court's "equitable outcome" determination. The court's conclusion was based on its determination that Frances's primary goal in the transaction was to ensure Mark was able to continue owning and managing the center for the foreseeable future. Her original intention had been to gift Mark her entire interest in MVP by changing the terms of her trust, so when Mark offered to purchase her interest instead, she "readily agreed" to a sale. The court found Frances was not motivated by getting the maximum price for her share.
Kathleen disagrees with that view of Frances's state of mind; she claims, "The trial court inappropriately equated the January 2008 Holographic Amendment (likely executed to alleviate Mark's fear Kathleen would not sell) with Mark's testimony that Frances wanted to 'gift' him the Center."
But it was the court's job, as the trier of fact, to determine the significance of Frances's execution of the Holographic Amendment in light of the surrounding circumstances. The document states, on its face, Frances's intent to give her share in the center to Mark. The court did not abuse its discretion by interpreting the document as expressing that intent.
B. Sufficiency of the Evidence to Support the Court's Finding that Mark Complied with Fiduciary Duties
Kathleen's final argument is that "The trial court erred [in concluding Mark did not violate his fiduciary duties to Frances], because Mark owed fiduciary duties of loyalty and care, and Mark undisputedly violated those duties by failing to disclose the differences between the October 2008 transaction and Mark's earlier purchase of Kath[leen]'s interest, and more importantly, failed to disclose the dramatic decrease in Frances' annual income."
Although not labeled as such, this is another sufficiency of the evidence argument. As we have explained that argument cannot be sustained without a full analysis of all the evidence pertaining to the issue, both favorable and unfavorable, and an assessment of why that evidence, taken as a whole, cannot support the court's finding. Kathleen fails to satisfy that standard, and thus waives the claim.
Indeed, the appellant's appendix filed in conjunction with Kathleen's opening brief contains only a fraction of the exhibits introduced into evidence. It is only by reviewing the respondent's appendix that we can see that many of the exhibits Kathleen ignored are documents reflecting communications between Kathleen, Mark, and Frances. Because we must presume the record contains evidence to support all the court's findings, an appellant cannot succeed on a substantial evidence challenge by presenting- and addressing-only a fraction of the evidence that was before the trial court.
Kathleen claims that "Mark also breached his fiduciary duty by failing to fully disclose the magnitude of the reduction in Frances' monthly income and its dramatic impact to the value of the residue of the Trust that would eventually be split with Kath[leen], stating: 'We're going to establish a ceiling on the value of your assets for estate taxes, and you will be provided with cash flow to build up your estate, to share with your children, and those children can share with their kids and your grandkids.'" Without any context, we cannot tell if the quoted passage supports the assertion. We must presume, in the absence of a complete analysis of the record, that if the statement was misleading, the matter was later clarified in other communications.
Finally, Katheen summarizes a complicated series of statements purportedly made by Mark at trial, comparing the income Frances had been receiving from MVP prior to the sale of her share to Mark, with the income she received after the sale. Kathleen then argues that Mark "failed to adduce any evidence justifying his concealment from Frances of the . . . effect the October 2008 transfer would have on Frances' income." Once again because Kathleen has failed to address all of the statements made by Mark to Frances regarding her projected income, we cannot conclude the court erred in finding that Mark did not conceal that effect from Frances. The court found Frances believed Mark deserved a greater share of MVP as a consequence of all his hard work and she supported his desire to continue owning and operating MVP for the foreseeable future.
We find no error in the trial court's determination that Mark complied with his fiduciary duty to Frances.
DISPOSITION
The judgment is affirmed. Mark is to recover his costs on appeal.
WE CONCUR: MOTOIKE, J. DELANEY, J.