Opinion
G057065
06-30-2020
BRUCE PRIOR, Plaintiff and Appellant, v. STUART R. PRIOR, Defendant and Respondent.
Diem Law and Robin L. Diem for Plaintiff and Appellant. Attlesey and Storm, Suzanne S. Strom and Marc W. Thomas for Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. 30-2017-00923142) OPINION Appeal from an order of the Superior Court of Orange County, Nathan R. Scott, Judge. Affirmed. Diem Law and Robin L. Diem for Plaintiff and Appellant. Attlesey and Storm, Suzanne S. Strom and Marc W. Thomas for Defendant and Respondent.
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Esther Prior had five sons, including Stuart and Bruce Prior. She suffered a stroke in March 2014. Afterwards, Stuart began living with Esther and providing round-the-clock care until her death in March 2017. Following her death, Bruce learned that Esther had signed a grant deed in July 2016 transferring title of a rental property she owned to Stuart. Bruce filed a petition to set aside this transfer on grounds it was the product of undue influence, among other things. Following trial, the court found in favor of Stuart.
To avoid confusion, we refer to all members of the Prior family by their first names.
Bruce appeals, claiming he presented enough evidence at trial to trigger a presumption of undue influence under Civil Code section 1575 and O'Neil v. Spillane (1975) 45 Cal.App.3d 147 (O'Neil). He asserts the trial court erred by failing to apply the presumption and also contends that Stuart did not present sufficient evidence at trial to rebut the presumption. Thus, Bruce claims, the trial court's order should be reversed, or he should be granted a new trial. We disagree. The trial court's findings are supported by substantial evidence, and we therefore affirm the order.
All further undesignated statutory references are to the Civil Code.
I
FACTS AND PROCEDURAL HISTORY
We provide a summary of the operative facts, and we will develop further details, as relevant, in the discussion portion of this opinion. A. Family Background
Esther and her husband, Francis, who passed away in the 1990's, had five sons. One son predeceased Esther. The other four were Steven, Frank, and the two parties to this case, Bruce and Stuart. At the time of her death, Esther was estranged from Steven and had not talked to him in years.
Throughout her life, Esther purchased and sold residential real estate. She regularly used her property and the money she earned from it for the benefit of her family. For example, she rented several properties to her sons. While the amount of rent her sons paid is unclear, the record suggests they paid below market rates. This is bolstered by the fact that she rented properties to her friends and grandchildren at rates below market. Esther also gifted and loaned money to her sons and grandchildren over the years. This included giving money to Bruce, Stuart, and Steven to buy their own houses.
After Francis passed way, Esther lived by herself up until March 2014, when she was hospitalized for several days after suffering a stroke. After her discharge, Stuart began living with and caring for Esther and did so until her death. At first, Stuart moved into Esther's condo in Seal Beach. Then, around July 2014, he moved Esther into his own house in Dana Point. Stuart was with Esther continuously after her stroke. Among other things, he did her grocery shopping, cooked for her, took her to medical appointments, picked up her medications, and accompanied her to social functions.
Medical records after Esther's hospitalization showed she was losing weight and her short-term memory was mildly impaired. Similarly, some family members observed that Esther had begun to lose weight, appeared disheveled, and became less communicative and alert after she moved in with Stuart. Nonetheless, all of her medical records following her stroke indicated she was still "[o]riented to time, place, person & situation." While records from some appointments noted that she showed poor insight and judgment, records from other visits documented her judgment and insight as normal. In particular, medical records from January 21 and April 29, 2016, the last two records with notes on her mental condition prior to her death, stated she had normal insight and judgment. B. The Disputed Transfer
This dispute concerns a house in Long Beach that Esther and Francis purchased in the 1960s for $10,000 (the property). Esther and Francis never lived in the house. Instead, they used it exclusively as a rental property, typically renting it to family or friends at below market rates. In fact, Bruce, Steven, and Gordon (the son that predeceased Esther) lived there at different times.
On July 19, 2016, Esther executed a grant deed transferring ownership of the property to Stuart. The grant deed had been prepared by Mission Escrow at Stuart's direction. Stuart drove Esther to have the grant deed executed and notarized. He also had the deed recorded in the Los Angeles County Recorder's office on July 27, 2016 and returned to him after recording. Stuart did not tell Frank and Bruce about the grant deed until after Esther died.
At the time of the transfer, Esther's grandson, Joseph Prior (Steven's son), was renting the property for approximately half its market rate. Esther had rented him the house at a low rate so he could save money to buy a home. Esther died intestate a few months after the transfer, in March 2017. Her final autopsy report indicated the cause of death was pneumonia. C. The Probate Petition
In May 2017, Bruce filed a petition to be appointed administrator of Esther's estate, which was granted. Bruce then filed a petition under Probate Code section 850 for an order setting aside the grant deed on grounds that Esther lacked capacity and that the transfer was the product of undue influence. The petition was tried in September 2018. At trial, Bruce argued undue influence could be established in two different ways. First, a presumption of undue influence could be found under section 1575 and O'Neil, which would shift the burden to Stuart to rebut the presumption. Second, undue influence could be found under the factors set forth in Welfare and Institutions Code section 15610.70, subdivision (a).
After trial, the court ruled Bruce had failed to show that Esther lacked capacity and also failed to show that the grant deed was the product of Stuart's undue influence. With regard to section 1575 and O'Neil, the trial court found that undue influence could not be presumed: "While Esther may have had a confidential relationship with Stuart, Bruce failed to show Stuart actively participated in procuring the deed or unduly profited under it." The court further stated that "[e]ven if undue influence could be presumed, Stuart rebutted the presumption." As to the Welfare and Institutions Code, the trial court found Bruce had failed to show that Esther was vulnerable to undue influence, that Stuart had used any inappropriate actions or tactics, or that the transfer was inequitable.
As to the evidence presented at trial, "[t]he court generally [found] the percipient witnesses credible. . . . [T]he witnesses simply saw and heard different things at different times. . . . The weight of the evidence here show[ed] Esther had the capacity to gift the house to Stuart and did so without his undue influence. While Esther lost weight and became less communicative after her stroke, the court credit[ed] the generally positive findings of her physician . . . over any contrary observations by her extended family."
In this narrow appeal, Bruce seeks review of a portion of the trial court's undue influence ruling. Specifically, he asserts the trial court erred by failing to apply the presumption of undue influence under O'Neil and section 1575, which would have shifted the burden to Stuart. Bruce further argues that Stuart failed to present sufficient evidence at trial to rebut the presumption, warranting reversal or a new trial.
Bruce maintains this is an appeal of a final judgment under Code of Civil Procedure section 904.1, subdivision (a)(1). But the trial court's ruling is not labeled as a judgment, nor does it appear to be one. Regardless, we find it to be an appealable order under Code of Civil Procedure section 904.1, subdivision (a)(10), which allows an appeal to be taken "[f]rom an order made appealable by the Probate Code," and Probate Code section 1300, subdivision (k), which states an appeal may be taken of an order "[a]djudicating the merits of a claim made under" Probate Code section 850.
II
DISCUSSION
A. Applicable Law
"Undue influence . . . is a shorthand legal phrase used to describe persuasion which tends to be coercive in nature, persuasion which overcomes the will without convincing the judgment. [Citation.] The hallmark of such persuasion is high pressure, a pressure which works on mental, moral, or emotional weakness to such an extent that it approaches the boundaries of coercion. In this sense, undue influence has been called overpersuasion." (Odorizzi v. Bloomfield School Dist. (1966) 246 Cal.App.2d 123, 130.)
Section 1575 establishes three types of undue influence. Two are relevant here. The first involves "the use, by one in whom a confidence is reposed by another, or who holds a real or apparent authority over him, of such confidence or authority for the purpose of obtaining an unfair advantage over him." (§ 1575, subd. (1).) The second consists "[i]n taking an unfair advantage of another's weakness of mind." (§ 1575, subd. (2).) If a petitioner establishes either, a presumption arises that the transfer was the product of undue influence. The burden then shifts to the beneficiary to show the transaction was free from influence. (O'Neil, supra, 45 Cal.App.3d at pp. 153-156.)
The third, which is not at issue in this appeal, involves "taking a grossly oppressive and unfair advantage of another's necessities or distress." (§ 1575, subd. (3).)
"It is for the trier of fact to determine whether the presumption [of undue influence] will apply and whether the burden of rebutting it has been satisfied." (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. (Estate of Auen (1994) 30 Cal.App.4th 300, 311, 313.) "On review for substantial evidence, we examine the evidence in the light most favorable to the prevailing party and give that party the benefit of every reasonable inference. [Citation.] We accept all evidence favorable to the prevailing party as true and discard contrary evidence." (In re Marriage of Drake (1997) 53 Cal.App.4th 1139, 1151.) Further, "[t]he appellate court does not reweigh the evidence, evaluate the credibility of witnesses or indulge in inferences contrary to the findings of the trial court. [Citations.] The substantial evidence standard of review is generally considered the most difficult standard of review to meet, as it should be, because it is not the function of the reviewing court to determine the facts." (In re Michael G. (2012) 203 Cal.App.4th 580, 589.) B. Stuart's Preliminary Arguments
Before reviewing the trial court's decision on the presumption of undue influence, we address Stuart's arguments that such analysis is unnecessary.
First, Stuart argues that O'Neil is inapplicable due to Evidence Code section 662. He contends that under this statute there is a presumption of ownership in favor of himself, which Bruce must rebut by clear and convincing evidence. But this statute does not apply. It states "[t]he owner of the legal title to property is presumed to be the owner of the full beneficial title. This presumption may be rebutted only by clear and convincing proof." (Evid. Code, § 662, italics added.) The statute applies "by its express terms, when there is no dispute as to where legal title resides but there is question as to where all or part of the beneficial title should rest." (Murray v. Murray (1994) 26 Cal.App.4th 1062, 1067.) Here, the parties' dispute concerns legal title to the property, not beneficial title.
Second, Stuart claims that Bruce waived his right to appeal this issue by telling the trial court he was not requesting application of the undue influence presumption under section 1575. We find little merit to this argument. The portion of the record on which Bruce relies is unclear as to whether the parties are discussing section 1575 or Welfare and Institutions Code section 15610.70. Further, Stuart discussed the presumption under section 1575 in his trial brief and during other portions of the trial. And, most tellingly, the trial court ruled on this issue. Thus, we find no waiver occurred. C. Applying the Presumption of Undue Influence
Relying on O'Neil, Bruce contends sufficient evidence was presented at trial to raise a presumption of undue influence under subdivisions (1) and (2) of section 1575 and shift the burden to Stuart. (See O'Neil, supra, 45 Cal.App.3d at pp. 153-156.) We find substantial evidence supports the trial court's determination that undue influence could not be presumed.
1. Section 1575, subdivision (1)
Under O'Neil, a presumption of undue influence arises under subdivision (1) of section 1575 where the petitioner establishes (1) a confidential relationship existed between the grantor and grantee; (2) the grantee was actively involved in the procurement of the disputed deed; and (3) the transaction resulted in a definite detriment to the grantor and a substantial benefit to grantee. (O'Neil, supra, 45 Cal.App.3d at pp. 153-154.) The trial court found that Bruce had not established the second or third prongs. These findings are discussed below.
a. active procurement
Bruce contends the following evidence warrants a finding of active procurement: (1) Stuart, with the assistance of his friend Louis Nahmias, directed Mission Escrow to prepare the grant deed; (2) Stuart drove Esther to have the grant deed executed and notarized; (3) Stuart had the grant deed recorded and then mailed to him; and (4) Stuart did not tell Frank and Bruce about the grant deed until after Esther died. Bruce argues that O'Neil found this prong had been met under similar facts.
In O'Neil, the grantor's sister, her only living relative, passed away. The death severely impacted the grantor and she became increasingly dependent upon a few friends, including the Spillanes. Four years after her sister's death, the grantor asked James Spillane to find an attorney to draft her will. James had the wife, an attorney, of one of his longtime friends draft a will which left certain real property to the Spillanes. The attorney prepared the will without consulting the grantor. James and the attorney then brought the will to the grantor to be signed. During the visit, the grantor signed the will and was convinced, apparently by the attorney, that she should also execute a deed granting two-thirds of her home to the Spillanes in joint tenancy. The grantor executed the deed under the belief nothing would be taken from her, and the Spillanes subsequently concealed their ownership interest from the grantor. (O'Neil, supra, 45 Cal.App.3d at p. 151.) When the grantor discovered the Spillanes were actual owners she requested that they reconvey the property to her. They refused and the grantor sued to rescind the deed. The trial court found the deed had been obtained by undue influence and rescinded it. (Id. at pp. 151-152.) The appellate court affirmed. (Id. at p. 161.)
O'Neil is distinguishable. In O'Neil, the grantor was convinced by an attorney procured by the Spillanes to execute the grant deed, and did so under the belief that nothing would be taken from her. (O'Neil, supra, 45 Cal.App.3d at p. 151.) There is no such evidence here. Instead, the evidence shows Esther transferred the property of her own volition. Stuart testified that Esther asked him to have the grant deed prepared in 2014, and that his friend, Nahmias, helped with the transfer. This was corroborated by Nahmias. He testified that when he first met Esther in the summer of 2014, she asked for help transferring the property to Stuart after she learned Nahmias worked in real estate. Based on her inquiry, Nahmias contacted Mission Escrow to inquire about preparing the grant deed. Stuart testified that nearly two years after the grant deed was prepared, Esther requested his help getting it signed. The trial court found both these accounts credible, and we do not question this finding on appeal. (In re Michael G., supra, 203 Cal.App.4th at p. 589.)
Further, the trial court's determination that Stuart did not actively procure the grant deed is supported by substantial evidence. Case law in the context of wills is instructive: "active procurement of [a] will . . . require[s] a showing that the beneficiary actively participated in the preparation of the will; it [is] not enough that the beneficiary procured an attorney to draft the will if the beneficiary did not affect the contents of the will. [Citations.] 'The procurement of a person to witness the will or of an attorney to draw it does not itself constitute active participation in the preparation of the will.'" (Estate of Swetmann (2000) 85 Cal.App.4th 807, 821.)
While Stuart procured Mission Escrow to prepare the grant deed, there is credible evidence he did so under Esther's direction. Thus, this fact is not sufficient evidence that Stuart affected the substance of the transfer. Stuart's assistance in getting the deed notarized and recorded is incidental and does not constitute active participation. Finally, Stuart's choice not to tell his brothers about the transfer is not persuasive evidence of active participation. He may have stayed silent for a variety of lawful reasons. This fact is further undercut by Stuart's testimony that he told his brothers in 2014 and in subsequent years prior to Esther's death that she wanted to give him the property.
b. definite detriment and substantial benefit
The trial court also determined that Bruce failed to show that Stuart "unduly profited" under the grant deed. Bruce argues the trial court applied the incorrect standard. He asserts the correct one under O'Neil is whether the transfer was a definite detriment to Esther and a substantial benefit to Stuart. (See O'Neil, supra, 45 Cal.App.3d at pp. 153-154.) We need not analyze whether the trial court applied the right standard. The same result is reached under Bruce's proposed wording of the rule, as he has failed to establish the transfer was a definite detriment to Esther.
O'Neil found the grantor suffered a definite detriment because she was "deprived of her primary asset providing her security and livelihood." (O'Neil, supra, 45 Cal.App.3d at p. 153.) Bruce argues the transfer was a definite detriment to Esther because it took away her most valuable asset: a rental property worth $500,000. While the parties agree on the value of the property, Bruce has not cited any evidence demonstrating it was Esther's most valuable asset. And, even if it were, Bruce has not shown that the transfer deprived Esther of a primary asset for her security and livelihood.
First, Bruce does not cite any evidence establishing the assets Esther owned at the time of the transfer. This information is crucial since the record shows Esther was heavily involved with real estate throughout her life. Without it, the amount of harm Esther suffered by transferring the property cannot be determined. Second, Bruce has not shown that Esther relied on the property for security or livelihood. She did not appear to depend on the property for housing. It had been used exclusively as a rental since the 1960s and Esther had lived with Stuart for two years at the time of the transfer. Further, she was renting the property to her grandson at roughly half its market rate at the time. This creates a reasonable inference that she did not rely on the property for income and just wanted it to be used for the benefit of her family. There is sufficient evidence that Esther thought Stuart would be the best person to do so, as further explained in part D infra.
2. Section 1575, subdivision (2)
Under subdivision (2) of section 1575, "the susceptibility to imposition, the extreme age and infirmity, of the grantor, together with slight evidence of circumstances from which it may be inferred that the instrument was the product of coercion, will suffice to shift the burden and require the beneficiary to show affirmatively that the transaction was fair and free from influence." (O'Neil, supra, 45 Cal.App.3d at p. 155.)
Bruce argues Esther's mental health was impaired, and she was completely dependent on Stuart. Further, as argued in the first prong above, he contends Stuart's assistance to Esther in obtaining the grant deed and getting it signed and recorded is sufficient evidence of coercion.
For the same reasons he was unable to show active procurement, Bruce has not established the transfer was the product of coercion. There is substantial evidence that Esther, of her own free will, asked Stuart to have the grant deed prepared. The incidental assistance that Stuart provided her in getting it signed and recorded is insufficient to show coercive conduct. (See Estate of Swetmann, supra, 85 Cal.App.4th at p. 821.) D. Rebutting the Presumption
The trial court found that "[e]ven if undue influence could be presumed, Stuart rebutted the presumption." The trial court's ruling does not appear to provide any further analysis of this issue. After the quoted statement, the ruling begins a new paragraph analyzing Bruce's undue influence arguments under Welfare and Institutions Code section 15610.70. In any case, we find the trial court's conclusion to be supported by substantial evidence.
Bruce appears to believe this portion of the ruling is analyzing whether Stuart rebutted the presumption under section 1575 and O'Neil. But, as set forth above, we read it to be discussing whether Bruce established undue influence under Welfare and Institutions Code section 15610.70.
We first address Bruce's assertion that the presumption must be rebutted by clear and convincing evidence. While Stuart does not challenge this contention, it is contradicted by recent case law. Bruce relies on O'Neil and Bank of America v. Crawford (1945) 69 Cal.App.2d 697 (Crawford) for this evidentiary standard. O'Neil does not set forth the standard to be applied. (See O'Neil, supra, 45 Cal.App.3d at p. 155.) While Crawford, which was decided 75 years ago, applied a clear and convincing standard (Crawford, at p. 701), recent courts have disagreed: "[a]lthough some authority requires clear and convincing evidence to rebut the presumption [, citing Crawford], the weight of authority concludes the burden of rebutting the presumption of undue influence is by a preponderance of the evidence. [Citations.] Moreover, Evidence Code section 115 defines burden of proof and states, 'Except as otherwise provided by law, the burden of proof requires proof by a preponderance of the evidence.'" (In re Marriage of Mathews (2005) 133 Cal.App.4th 624, 631.)
In In re Marriage of Balcof (2006) 141 Cal.App.4th 1509, 1519-1520, this court cited Mathews when applying the preponderance of the evidence standard to determine whether a beneficiary had rebutted an undue influence presumption under Family Code section 721. We again find Mathews applicable. Neither section 1575 nor O'Neil specifies the burden of proof required to rebut the presumption of undue influence at issue. And under Evidence Code section 115 the default burden requires proof by a preponderance of the evidence. Though Crawford applied a clear and convincing standard, it was decided nearly 20 years before Evidence Code section 115 became operative. (See Balcof, at p. 1522.) As such, we determine Stuart was only required to overcome the presumption by a preponderance of the evidence. Regardless, we find Stuart rebutted the presumption under either standard.
There is substantial evidence that Esther wanted to give Stuart the property of her own free will. As set forth above, Stuart testified that Esther asked him to have the grant deed prepared, which was corroborated by Nahmias. Stuart also testified that Esther expressed her desire to give him the property several times between 2008 and 2016. She wanted him to use the house to take care of Joseph, her grandson. This testimony was corroborated by Joseph, who testified that Esther had told him as early as 2008 that she wanted Stuart to have the property. Joseph elaborated that Esther said she wanted the house to be used as a place for her family to live, such as himself. She thought Stuart would best carry out this desire. Esther told Joseph that Frank, a real estate investor, might sell the house, and she did not want to give the house to Bruce or Gordon (who passed away in 2015) because they had debt problems. She did not mention Steven since they were estranged.
There was also testimony from Joseph that Stuart and Esther had a uniquely close relationship prior to and after her stroke. Given their close bond, Esther's history of financial generosity to her family, and that Stuart cared for her after her stroke, it is reasonable to infer that Esther wanted to give Stuart the property.
Finally, the testimony from Stuart's expert indicated that Esther was not unusually susceptible to undue influence at the time of the transfer. He opined that Esther's medical records closest to the date of the transfer indicate that she was oriented to the world around her and both her memory and judgment were intact. In his opinion, "the best evidence of her mental state closest in time . . . is that she was in good shape cognitively within weeks of executing the [grant deed]." The trial court found Stuart's expert persuasive. This further supports the conclusion that Esther wanted to transfer the property to Stuart of her own volition.
III
DISPOSITION
The order is affirmed. Stuart is entitled to his costs on appeal.
MOORE, ACTING P. J. WE CONCUR: ARONSON, J. GOETHALS, J.