Opinion
A097740.
7-9-2003
NANCY OWENS, Plaintiff and Respondent, v. ESTATE OF JAMES EVERY, et al., Defendants and Appellants.
Robin Every and James Every, Sr., as administrators of the Estate of James Every (the Estate), appeal from a judgment in favor of respondent Nancy Owens awarding her 620 Yuba Street, a house she shared with the decedent for 10 years. Although the decedent failed to make a will in Owenss favor, the trial court found an enforceable oral agreement to leave the Yuba Street property to Owens and awarded her title. We affirm the judgment.
Robin Every and James D. Every, Sr. are the children of the decedent, James Every.
PROCEDURAL AND FACTUAL BACKGROUND
Nancy Owens (Owens) and James Every (Every) had a 17-year nonmarital relationship. In 1988, Owens and Every moved from an apartment into a house at 620 Yuba Street in Richmond, California. Every paid the down payment from proceeds of the sale of his previous house and took sole title. Owens furnished the house. According to Owens, she and Every agreed that she would do this in lieu of contributing to the down payment. Over the next 10 years, Owens paid for the couples utilities, food, and household expenses, while Every paid for the mortgage, property taxes, and home insurance.
According to Owens, Every took sole title for tax reasons.
According to Owens, Every told her as early as 1988 that the Yuba Street property would be hers if he died. Every and Owens discussed preparing wills but never got around to it. In March 1998, Every passed away suddenly. He died intestate. Everys assets at death consisted of the Yuba Street property and an automobile.
After Robin Every and James Every, Sr. declined to transfer title to the Yuba Street property to Owens, Owens filed a complaint against the Estate. She contended that she and Every had an agreement pursuant to which the Yuba Street property was to go to her upon Everys death. Over the course of a six-day bench trial, Owens and numerous others testified to the existence of the oral agreement to leave the Yuba Street property to Owens. The Estate raised the statute of frauds. In response, Owens argued that the Estate should be equitably estopped from asserting that defense.
The trial court ruled in Owenss favor on her claim that Every agreed to leave the Yuba Street property to her, but concluded that there was no definite agreement with respect to any other property. It held that Everys agreement to leave the Yuba Street property to Owens was enforceable against the Estate, notwithstanding the statute of frauds, because Owens had detrimentally relied on Everys promise and would be unconscionably injured by a failure to enforce it, and because the Estate would be unjustly enriched by the failure to enforce the promise. The trial court entered judgment awarding title to the Yuba Street property to Owens. This timely appeal followed.
DISCUSSION
I. The Estate Was Not Prejudiced by the Trial Courts Failure to Find a Marvin Agreement
The Estate argues that the trial court erred by failing to find a Marvin agreement between Owens and Every, and that this error unjustly enriched Owens and prejudiced the Estate. According to the Estate, if the trial court had found a Marvin agreement, Owens would have recovered only about half of Everys estate, rather than property which comprised substantially more than half the estate.
Marvin v. Marvin (1976) 18 Cal.3d 660, 134 Cal. Rptr. 815, 557 P.2d 106.
This argument rests on two significant misconceptions: (1) that a Marvin agreement and a contract to make a will deal with the identical subject matter, such that a trial court or litigant can choose one set of principles or the other, and (2) that a Marvin agreement would necessarily entail an even division of assets and leave the Estate better off. Neither is true. Consequently, the trial courts failure to find a Marvin agreement did not prejudice the Estate.
The Estate characterizes the Owens-Every agreement as a contract to make a will; Owens resists this characterization. Whether the agreement is characterized as an agreement to make a will or an agreement to leave certain property at death does not affect the principles we apply.
First, a Marvin agreement and a contract to make a will do not address the same subject matter. The subject matter of the two types of agreements is entirely different, and parties may choose to enter neither, or either, or both. A Marvin agreement is an agreement regarding the ownership of assets acquired during the course of a nonmarital relationship. (E.g., Cochran v. Cochran (1997) 56 Cal.App.4th 1115, 1120.) In contrast, a will contract is an agreement concerning the disposition of assets upon death. (E.g., Juran v. Epstein (1994) 23 Cal.App.4th 882, 889.) An unmarried couple might agree to share assets acquired during the relationship Marvin agreement-with no understanding concerning the disposition of each persons assets at death, or they might have no agreement to share assets, but an understanding as to what would happen at death, or they might have both. Whether a Marvin agreement existed in this case is thus largely irrelevant to the trial courts finding that the Estate was equitably estopped from denying the existence of a contract to make a will. The trial courts ruling does nothing to undermine Marvin agreements or render them illusory.
Second, contrary to the Estates understanding, a Marvin agreement need not contemplate an equal division of all assets. The Supreme Courts landmark opinion in Marvin held that nonmarital partners may enter into an enforceable agreement to share property. The revolutionary holding of Marvin is the recognition that nonmarital partners "may order their economic affairs as they choose." (Marvin, supra, 18 Cal.3d at p. 674.) Under Marvin, courts will enforce the parties non-meretricious asset-sharing agreements, whatever those agreements may be. (Ibid.) Thus, nonmarital partners "may agree to pool their earnings and to hold all property acquired during the relationship in accord with the law governing community property; conversely they may agree that each partners earnings and the property acquired from those earnings remains the separate property of the earning partner." (Ibid.) It follows from the principle of self-determination that nonmarital partners may enter an agreement that falls anywhere between these extremes as well.
Thus, even if Owens and Every had a Marvin agreement, it does not follow that the terms of that agreement would contemplate an even division of assets, or that enforcement of a Marvin agreement would leave the Estate any better off than the trial courts actual ruling. In fact, it is Owens, not the Estate, who has cause to complain that the trial court found no Marvin agreement in this case. Had the trial court found a Marvin agreement in addition to the agreement concerning disposition of the Yuba Street property, Owens might have been entitled to additional assets. Owens has not appealed this portion of the trial courts judgment, and we do not consider it further.
II. The Finding of Equitable Estoppel Is Supported by Substantial Evidence
The Estate also challenges the trial courts rejection of its statute of frauds defense based on equitable estoppel. We conclude that substantial evidence supports the trial courts ruling.
A. Equitable Estoppel Is Available to Enforce an Oral Contract to Make a Will
At the time of Everys death in 1998, California law required a contract to make a will to be in writing. (Former Prob. Code, § 150, repealed by Stats. 2000, ch. 17, § 2.) However, California courts have long recognized that "equitable estoppel may preclude the use of a statute of frauds defense." (Byrne v. Laura (1997) 52 Cal.App.4th 1054, 1068.) In the leading case on the subject, Justice Traynor explained: "The doctrine of estoppel to assert the statue of frauds has been consistently applied by the courts of this state to prevent fraud that would result from refusal to enforce oral contracts in certain circumstances. Such fraud may inhere in the unconscionable injury that would result from denying enforcement of the contract after one party has been induced by the other seriously to change his position in reliance on the contract [citations], or in the unjust enrichment that would result if a party who has received the benefits of the others performance were allowed to rely upon the statute." (Monarco v. Lo Greco (1950) 35 Cal.2d 621, 623-624, 220 P.2d 737.)
Unless otherwise indicated, all statutory references are to the Probate Code. Under former section 150, a contract to make a will or not to revoke a will or to die intestate, made after December 31, 1984, could only be established by one of the following: "(1) Provisions of a will stating material provisions of the contract. [P] (2) An express reference in a will to a contract and extrinsic evidence proving the terms of the contract. [P] (3) A writing signed by the decedent evidencing the contract." (Stats. 1990, ch. 79, § 14, p. 474.)
Section 21700, enacted with the repeal of former section 150 and effective January 1, 2001 (Stats. 2000, ch. 17, § 8) recognizes that such contracts can also be established by "clear and convincing evidence of an agreement between the decedent and the claimant or a promise by the decedent to the claimant that is enforceable in equity." (§ 21700, subd. (a)(4).)
In particular, equitable estoppel can be used to avoid former section 150s writing requirement and enforce an oral agreement to make a will. (Estate of Housley (1997) 56 Cal.App.4th 342, 358; Juran v. Epstein, supra, 23 Cal.App.4th at p. 894.) Application of equitable estoppel requires that "(a) the promisee detrimentally relied on the agreement and would suffer an unconscionable injury if the oral agreement were not enforced or (b) the promisor would receive unjust enrichment if allowed to retain the benefit of the promisees performance without abiding by the promisors obligations under the oral agreement." (Estate of Housley, 56 Cal.App.4th at p. 359; see Crail v. Blakely (1973) 8 Cal.3d 744, 751, 106 Cal. Rptr. 187, 505 P.2d 1027.)
B. The Trial Court Could Find an Enforceable Agreement to Convey the Yuba Street Property to Owens in the Absence of an Express Quid Pro Quo Agreement
The Estate does not contest the fact that Every promised the Yuba Street property to Owens. However, it argues that there was no express quid pro quo. That is, Owens and Every never bargained explicitly and spelled out that certain of her economic contributions would be made in exchange for other economic contributions on his part.
No express bargaining was required to render Everys promise enforceable; instead, it could be enforced under principles of promissory estoppel. Promissory estoppel applies whenever a clear and unambiguous " promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance would result in an injustice if the promise were not enforced." (Lange v. TIG Ins. Co. (1998) 68 Cal.App.4th 1179, 1185.) The Estate does not contest the trial courts findings that following Everys promise, Owens moved in, made economic contributions, and made no attempt to secure alternative housing. Owens never asked Every to put her name on the title to the Yuba Street property because of his promise. This is not an arms length commercial transaction. Where close personal relationships are involved, agreements often may be implied rather than express. The trial court could reasonably conclude that Owenss actions were taken in reliance on Everys oft-repeated promise, and could conclude that it would be unjust to allow the Estate to retain the home Every and Owens built together and Every intended Owens to have.
C. Substantial Evidence Supports the Finding That the Estate Would Be Unjustly Enriched If Allowed to Assert the Statute of Frauds
The Estate further contends that the trial court improperly applied equitable estoppel to defeat the Estates statute of frauds defense. We disagree.
"Whether the doctrine of equitable estoppel should be applied in a given case is generally a question of fact." (Byrne v. Laura, supra, 52 Cal.App.4th at p. 1068.) We review the trial courts factual findings for substantial evidence. " When a finding of fact is attacked on the ground that there is no substantial evidence to sustain it, the power of an appellate court begins and ends with the determination as to whether there is any substantial evidence, contradicted or uncontradicted, which will support the finding of fact. [Citations.] [P] When two or more inferences can reasonably be deduced from the facts, a reviewing court is without power to substitute its deductions for those of the trial court. " (Scott v. Common Council (1996) 44 Cal.App.4th 684, 689, quoting Green Trees Enterprises, Inc. v. Palm Springs Alpine Estates, Inc. (1967) 66 Cal.2d 782, 784-785, 59 Cal. Rptr. 141, 427 P.2d 805.)
Considering the record in the light most favorable to the judgment, as we must, we conclude that the trial courts findings are supported by substantial evidence. The record permits the conclusion that the Estate would be unjustly enriched by refusal to enforce the oral promise to leave the Yuba Street property to Owens.
Where a decedent has received the benefits of a partys performance of an oral agreement, unjust enrichment would result if those who stand in decedents shoes were permitted to invoke the statute of frauds. (E.g., Crail v. Blakely, supra, 8 Cal.3d at p. 752.) This case presents a slight variation, in that it rests on a promise enforceable because of promissory estoppel, rather than an express bilateral contract. Nevertheless, we conclude that in these circumstances the same rule should apply. The rule of Crail and other like cases rests on the recognition that it would be unfair to allow an estate to have its cake and eat it too, retaining both the benefits of the other partys performance and the bargained-for consideration. A similar unfairness arises in those promissory estoppel cases where the party relies on the promise by conveying benefits on the promisor and the promisor freely accepts them. Where a promisor has made a promise and received the benefits of the promisees reliance, it would be unfair to allow the estate to retain those benefits without honoring the promise that led to that reliance.
We do not address whether the rule would ever apply in cases where the promisee detrimentally relies but does not convey any benefits on the promisor.
Owens introduced evidence that she furnished the Yuba Street property, paid for most or all of the food, utilities and other household items between 1988 and 1998, and contributed to home maintenance in reliance on Everys promise and statements about their relationship. The Estate does not challenge this evidence, other than to minimize the documentary evidence supporting Owenss claims as relating only to 1993. However, Owens testified that her payments continued over a 10-year period. There was no contrary testimony. The trial court was entitled to credit Owenss testimony, and we are not free to disregard the trial courts credibility determinations.
The Estate argues that no unjust enrichment would occur because Owens received other assets as a result of Everys death. This fact is immaterial. Unlike the detrimental reliance/unconscionable injury prong of the equitable estoppel doctrine, which focuses on the plaintiff, the unjust enrichment prong focuses on the defendant. Thus, the relevant question is what impact application of the statute of frauds will have on the Estate, not Owens. Where a decedent has received the benefit of the claimants reliance (here, Owenss economic contributions over 10 years), it would be unjust to allow an estate to retain that benefit while denying enforcement of the decedents promise. (See Crail v. Blakely, supra, 8 Cal.3d at p. 752; Day v. Greene (1963) 59 Cal.2d 404, 410-411, 29 Cal. Rptr. 785, 380 P.2d 385.) We uphold the trial courts conclusion that the Estate would be unjustly enriched were it allowed to break Everys promise.
As Owens correctly notes, these assets did not come from the Estate. They consisted primarily of funds from a retirement account for which Every had chosen Owens as the beneficiary.
The test for application of equitable estoppel is disjunctive. (Estate of Housley, supra, 56 Cal.App.4th at p. 359.) Thus, it is sufficient to find that either half of the test has been met. Because substantial evidence supports the conclusion that the Estate would be unjustly enriched by a refusal to enforce Everys oral promise, we need not consider the trial courts additional finding that Owens detrimentally relied on the promise and would be unconscionably injured by a refusal to enforce it.
Finally, the Estate argues that application of equitable estoppel in cases such as this one would render former section 150 illusory. The force of this argument is substantially reduced by the fact that the legislature repealed section 150 three years ago, a point nowhere acknowledged by the Estate. (See ante fn. 5.) While section 150 continues to apply to agreements to make a will entered between 1985 and 1999, such as the one in this case, we see no great public policy implications that would preclude application of equitable estoppel to excuse former section 150s requirements where the essential elements of an estoppel are present. To the contrary, our rejection of the statute of frauds defense here is consistent with the legislatures recent express recognition that a promise to make a will need not be in writing if it is enforceable in equity. (§ 21700, subd. (a)(4), added by Stats. 2000, ch. 17, § 8.)
DISPOSITION
We concur JONES, P.J., and STEVENS, J.