Opinion
A147431
12-20-2017
Estate of JACK OTTOVICH, Deceased. SEABOARD SURETY COMPANY, Petitioner and Respondent, v. HARVEY G. OTTOVICH et al., Objectors and Appellants.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Alameda County Super. Ct. No. P-500021)
Harvey G. Ottovich, Karen Rayl, Randy Ottovich, and Mark Ottovich (collectively appellants) appeal from a judgment, entered after a 14-day hearing, granting Seaboard Surety Company's (Seaboard) Probate Code section 850 petition to quiet title two properties in the name of their father's estate.
We refer to appellants by their first names for clarity.
All further statutory references are to the Probate Code unless otherwise indicated.
Appellants raise numerous issues: (1) Seaboard lacked standing to file a section 850 petition; (2) there is no substantial evidence that appellants acted in bad faith or in willful disregard of probate court orders; (3) the probate court erred in allowing Seaboard to amend its petition to conform to proof; (4) the court abused its discretion in striking appellants' new trial motion; (5) the court erred in awarding Seaboard attorney fees; (6) the court erred in including money, stocks and annuities in the estate; (7) the court erred in including rent from one of the properties in the estate; and (8) the court erred in rejecting Mark's and Harvey's "resulting trust" claims. None of these assertions has merit, and with a minor correction in the amount of the judgment, we affirm.
BACKGROUND
Appellants have been involved in and pursued much litigation related to their parents' probate estates. We summarize here only some of this history, as relevant to the issues raised in this appeal.
In 1996, Jack Ottovich was appointed conservator of the estate of a friend, Francis Ashley. Jack posted a bond issued by Seaboard to guarantee his performance. (Conservatorship of Estate of Ashley (Feb. 23, 2007, A109085) [nonpub. opn.].)
We take judicial notice of this opinion by Division Three of this Court. (Evid. Code, §§ 451, subd. (a), 452, subd. (a) & 459.)
Four years later, in November 2000, Jack and his wife Jeanette purchased and took title as joint tenants to two adjoining properties in San Lorenzo, one located at 15600 Lorenzo Avenue and the other at 15601 Washington Avenue (the San Lorenzo properties). Three months after the purchase, in February 2001, Jeanette died, and three months later still, Jack died in May 2001.
A year and a half later, in September 2002, Karen, Randy and Harvey were appointed executors of their father's estate.
They were also appointed executors of their mother's estate.
The same month, Seaboard filed a civil complaint arising out of the conservatorship proceeding for damages and equitable relief against Jack, Harvey (as trustee and personal representative of Jack's trust and estate), and his brother, Mark. The complaint stemmed from an accounting filed in the conservatorship, which triggered a report by the court investigator who was concerned about an unsecured loan Jack had made to a third party. Seaboard claimed it had demanded that Mark, the new conservator, pursue a claim on behalf of the conservatorship estate, but he refused to do so. Seaboard further alleged appellants had misappropriated assets of the conservatorship for themselves. Seaboard sought a determination that appellants held all such assets in trust for the conservatorship estate and the imposition of an equitable lien on the assets.
Mark was initially appointed the successor conservator in November 2001. He was replaced by a professional fiduciary in 2002. (Conservatorship of Estate of Ashley, supra, A109085.)
The third party, John Gonzales, was also named as a defendant in the civil action.
In March 2003, Mark filed a first and final accounting in the conservatorship. This accounting continued to include the questionable loan and a questionable annuity. (Conservatorship of Estate of Ashley, supra, A109085.)
The same month, Seaboard filed a petition in Jack's probate estate for leave to file a late creditor's claim pursuant to section 9103. Seaboard claimed it had not learned about alleged derelictions by the conservators until the court investigator's July 2002 report. Moreover, no notice had been given to Seaboard of Jack's probate proceeding, and it had received actual notice of the probate estate less than 60 days prior to filing its petition to file a late claim. In fact, Seaboard alleged appellants had deliberately kept Seaboard in the dark about the probate estate for their own gain and claimed appellants should be equitably estopped from raising any statute of limitations. One year later, in April 2004, and over Mark's objection (even though he was not an executor) that Seaboard's petition was untimely under Code of Civil Procedure section 366.2, the probate court granted Seaboard leave to file a creditor's claim. A week later, Seaboard filed a claim in the amount of $175,000. Appellants did not challenge the order granting Seaboard's petition to file a late creditor's claim either by appeal or writ petition.
Although the probate court conducted a hearing, no transcript of that hearing is included in the record in this appeal.
In the meantime, the public guardian had filed a petition for surcharge in the conservatorship, and in November 2004, the probate court issued an order finding Jack had breached his fiduciary duties to the conservatee and imposing a surcharge on his estate, on Karen, Harvey and Randy, as the estate's executors, and on Seaboard, jointly and severally. Appellants appealed that order, and two and a half years later, Division Three of this court affirmed it. (Conservatorship of Estate of Ashley, supra, A109085.) Seaboard ultimately paid the surcharge.
After affirmance of the surcharge order, Seaboard turned to its civil action, which had now been on file for nearly five years. In August 2007, it sought leave to file an amended complaint, which was granted. No answers were filed, and on September 11, 2007, the court entered a default judgment in favor of Seaboard and against appellants in the amount of $135,004.95 ($73,766.31 in damages, $1,205.64 in costs, and $60, 033.00 in attorney fees).
While all this was happening, little was going on in Jack's probate estate. Eight months after obtaining the default judgment, Seaboard, in May 2008, sought an order compelling the executors to file an inventory and appraisal of Jack's estate. Four months later, Seaboard filed an amended petition, adding a request for an accounting.
In January 2009, and again over Mark's objections (even though he was not an executor), the court ordered the executors to file an inventory and appraisal, and an accounting, and awarded attorney fees to Seaboard.
Two months later, in March, Karen filed an inventory and appraisal, signed only by herself, stating the appraised value of the estate was "$0." Seaboard objected, contending Jack had held a 100 percent ownership interest in the San Lorenzo properties. Seaboard asserted Jack and Jeanette had held the properties as joint tenants, and upon Jeanette's death, Jack had "acquired the properties as his sole and separate property . . . through the right of survivorship." Thus, said Seaboard, "these properties are unequivocally assets of his probate estate." In September, the court sustained Seaboard's objection and ordered the executors to file a corrected inventory and appraisal. No such inventory and appraisal or an accounting was ever filed.
In the meantime, after Karen filed the "$0" inventory and appraisal, but before Seaboard objected to it, appellants executed a deed granting the Washington Avenue property to themselves as joint tenants, and then executed a quitclaim deed granting the property to M.O.R.E. Partners, LLC, a company owned by Mark.
About a year later, following a September 2010 hearing in Jack's probate estate, the court entered minutes stating, "this matter is not properly before the Court for trial or litigation. [¶] On [the] one hand the executors of the estate claim it has no property, so under [P]robate Code [section] 12551 there should be a petition to terminate the estate. [¶] On the other hand Seaboard . . . , a creditor of the estate believes that there is property belonging to this estate. So, it seems Seaboard should file an 850 petition."
These minutes are not in the record in this appeal, but they are in the record of another appeal pending in this court (Seaboard Surety Company v. Rayl et al. (Dec. 20, 2017, A146808) [nonpub. opn.]). We therefore take judicial notice of them. (Evid. Code, §§ 451, subd. (a), 452, subd. (a) & 459.)
Just over a month later, in November 2010, Seaboard filed a section 850 petition to quiet title to the San Lorenzo properties in Jack's estate. Seaboard alleged, among other things, it remained "unclear as to how the 15601 Washington Avenue [property], . . . was transferred from Jack . . . to respondents Harvey G. Ottovich, Karen Rayl, Randy S. Ottovich and Mark Ottovich so that they could quit claim the property to M.O.R.E." Mark was named as a party to this proceeding, since he claimed an ownership interest in the properties.
In an answer filed by Mark, individually and as president of M.O.R.E., as well as an answer filed by the executors, appellants maintained Mark was the "100% owner" of the San Lorenzo properties. Appellants acknowledged their parents had taken title to the properties, but claimed Mark "supplied the money for the down payment on the property," "made all the payments on the property," "occupied and paid entire maintenance costs and collected all rent and managed the property as his own." Mark further claimed he was the title holder of the properties as the beneficiary of a resulting trust or alternatively that he owned the properties through adverse possession.
Before the hearing on the section 850 petition commenced, appellants filed a motion for judgment on the pleadings on the ground Seaboard's petition was untimely under Code of Civil Procedure section 366.2. Following a hearing in July 2013, the probate court ruled "[Code of Civil Procedure] section 366.2 does not apply because California courts have limited its application to actions on 'liability of the person' of the decedent. . . . [¶] [And h]ere, C[ode of Civil Procedure] section 366.2 does not apply because the 850 Petition is not against the decedent, but rather against the Respondents as executors of the Estate of Jack Ottovich, the Respondents individually, Mark Ottovich and other parties claiming a right" in the San Lorenzo properties. Appellants sought writ review, claiming the probate court had, in 2004, improperly granted Seaboard's petition to file a late creditor's claim. (Ottovich v. The Superior Court of Alameda County (Sept. 16, 2013, A139748).) We summarily denied relief. (Ibid.)
We take judicial notice of that writ petition and our disposition. (Evid. Code, §§ 451, subd. (a), 452, subd. (a) & 459.)
The hearing on the section 850 petition finally commenced in September 2013, and lasted 14 days over the course of five months, concluding in February 2014. Karen, Harvey and Randy were represented by counsel; Mark appeared in propria persona.
Karen testified that she filed a May 2002 tax return in her mother's estate which identified five properties, including the San Lorenzo properties, as belonging to the estate. However, after the return was filed, Mark and Harvey claimed four of the properties, including the San Lorenzo properties, "weren't really [the] parents" property but instead belonged to them. On cross-examination by Mark, Karen stated that after their parents died, their estate attorney, Jerome Blaha, disagreed with Mark about the ownership of the San Lorenzo properties. Karen then testified to a stipulation filed in her mother's estate, signed by appellants, the purported purpose of which was "to remove the said properties and certain stocks and accounts that were listed" from probate and give the San Lorenzo properties to Mark. Karen also testified Mark maintained the properties.
Blaha testified that he prepared four stipulations, two each for Jeanette's and Jack's estates, concerning claims by Harvey and Mark. However, only one stipulation was filed, concerning only Harvey's claims against Jeanette's estate. Further, that stipulation made no mention of any real property, but rather was only "as to particular assets in the Estate of Jeanette, which were as a resulting trust to go to Harvey." The anticipated stipulations concerning Mark were never filed in either estate because the parties never "came to resolution for the compromise with Mark Ottovich, and it could not come to a compromise with Mark Ottovich until some very serious tax problems were taken care of." --------
Mark testified that as of the time of the hearing, he had lived in the Washington Avenue property for about a year. He admitted he was not the owner of record of the San Lorenzo properties. He stated he had not taken any steps to transfer the property into his name as "[i]t would make no sense for me to do that until all these legal issues are corrected," referring to a bankruptcy proceeding, other proceedings and the current section 850 proceeding.
Seaboard sought to question Mark about answers he gave during a debtor's examination in a different proceeding (Harris v. Ottovich (Super. Ct. Alameda County, 2013, No. HG03-112816)). Overruling objections by appellants, the court allowed the questioning on the ground it bore on the issue of judicial estoppel because "Petitioner contends that Mr. Ottovich has, on numerous occasions and in numerous settings, denied ownership of the property, real property, which is at the core of this proceeding." Mark had stated in that proceeding that he did not pay income or social security taxes, did not have a bank account, had no property in his name, had only filed income taxes one time, and had "no income over the past 20 years."
Mark claimed an amended return was filed in his mother's estate "because [his] sister screwed up and put properties and stock in there that were not supposed to be in there." He could not explain why the properties were still listed on her amended return. He acknowledged the properties were absent from his father's amended return.
Mark further testified that he had used an agent for the purchase of the properties, and had purchased numerous other properties. He claimed he used his parents' credit for these transactions and "other than signing on [the] loan," his parents would not "have any input into the terms of the deal." He also claimed to have made improvements to the properties, which he estimated included $50,000 to $100,000 in materials and labor, including his own labor which he valued at $20 to $100 an hour. He estimated he had incurred an additional $200,000 in expenses for "loss of rents, making mortgage payments, taxes, insurance and whoever I had to hire as an assistant or a consultant." He claimed the Lorenzo Avenue property was being rented by a "day care and two other guys," who worked for him. Mark collected the rents, and stated he found the tenants. He further testified that he had subpoenaed Fremont Bank in 2010 and had obtained documents "that would have shown the expenses" he put into the properties, but he "no longer possess[ed]" them.
Blaha, the former estate lawyer, testified he first learned Seaboard was asserting a claim in March 2003. "[I]t may very well be that I learned that Karen Rayl knew about Seaboard and did not advise us to give notice. Our office sends out all the notice to creditors when we file the petition, and if we did not give proper notice, then Seaboard [m]ay very well have had a right to file a claim 60 days from the notice or 90 days, whatever that—that number is, from the actual written notice." Blaha also stated he had proposed a settlement to Seaboard because, according to him, the "settlement amount was so small that it would never have been worth the risk of loss of the attorneys' fees to defend it." However, Mark and the executors then told him he "was to do nothing further on this claim." Blaha also testified it was "not true" that Karen thought stipulations were to be filed in the respective probate matters "had resolved all these issues," because "she was working with us . . . to take care of all the tax liabilities."
Randy testified that in conversations with his father, his father had stated the San Lorenzo properties were Mark's and his father "went ahead and financed the properties, and then Mark would pay him back when he sold the house or the properties." However, Randy later testified that he "didn't even know about the properties until my dad passed away, and then we had a meeting with Mr. Blaha, and then we found out that properties were put into the estate that should not have been in the estate."
After the hearing had concluded, Seaboard sought leave to amend the section 850 petition to conform to proof and to add a request for double damages and attorney fees pursuant to section 859. Over appellants' objections, the court granted leave to file an amended petition.
In January 2015, the court issued a notice of intended decision, concluding, among other things, that the San Lorenzo properties were assets of the estate. In September, the court filed a 57-page statement of decision. And in November, it entered a judgment and several days later a corrected judgment that the San Lorenzo properties were assets of Jack's estate, rejecting Mark's and Harvey's resulting trust and adverse possession claims, and finding the executors and Mark jointly and severally liable to Jack's estate in the amount of $2,113,383.00. This amount included $600,000 for the San Lorenzo properties, $280,929 for failure "to account for money, stocks and annuities belonging to Jack L. Ottovich at the date of his death," $175,762.50 for rents from the Lorenzo Avenue property "in the amount of $1,5000 per month for the period from October 1, 2008 until November 1, 2015 . . . including interest," and $231,940.00 in attorney fees.
Appellants filed a notice of intent to move for a new trial on December 4, 2015, and 10 days later filed their supporting papers. They claimed Harvey had recently discovered a locked safe in a closet in his and his parents' residence, and on November 19, 2015, Mark had the safe unlocked. After two weeks of examining the contents of this safe, appellants claimed to have discovered, on December 5, a folder of documents which would "establish that the initial deposit was made on behalf of Mark Ottovich, and the source of the funds for the purchase of these properties was loans to Jack that were secured by Properties owned by Respondent Harvey Ottovich."
Seaboard filed an ex parte application to strike appellants' new trial motion pursuant to section 7220, and on January 8, 2016, after a hearing on the matter, the court struck the motion.
DISCUSSION
Seaboard's Standing
Appellants contend Seaboard lacked standing to file a section 850 petition. They base this contention on the premise that Seaboard's petition to file a late creditor's claim never should have been granted because it was untimely under Code of Civil Procedure section 366.2. Since the creditor's claim never should have been filed, say appellants, Seaboard was never an " 'interested person' " in the estate and thus had no standing to file a petition.
"We review questions as to the jurisdiction and authority of the probate court de novo. [Citations.] We apply the well-settled rules of statutory construction. The Supreme Court has held: 'When interpreting a statute our primary task is to determine the Legislature's intent. [Citation.] In doing so we turn first to the statutory language, since the words the Legislature chose are the best indicators of its intent.' [Citations.] Further, our Supreme Court has noted: ' "If the [statutory] language is clear and unambiguous there is no need for construction, nor is it necessary to resort to indicia of the intent of the Legislature." ' " (Estate of Kraus (2010) 184 Cal.App.4th 103, 112-113 (Kraus).)
Section 850 provides in pertinent part: "The following persons may file a petition requesting that the court make an order under this part: [¶] . . . [¶] (2) The personal representative or any interested person in any of the following cases: [¶] . . . [¶] (C) Where the decedent died in possession of, or holding title to, real or personal property, and the property or some interest therein is claimed to belong to another." (§ 850, subd. (a)(2)(C), italics added.) Thus, "[s]ection 850, by its clear and plain terms, does not require the probate court to find that the property in question belongs to the interested petitioning party." (Kraus, supra, 184 Cal.App.4th at p. 113.)
There can be no serious dispute that Seaboard is an "interested" party within the plain language of section 850. First, once Division Three of this court affirmed the surcharge imposed in the conservatorship and the executors of Jack's estate refused to pay it, Seaboard was compelled to do so in accordance with the bond. This, alone, made it "interested" in Jack's estate. Second, when Seaboard obtained a judgment in its civil action against a number of parties in 2007, including against the executors of Jack's estate, it became a judgment creditor, and, thus, was "interested" in Jack's estate for this reason, as well. (See Kraus, supra, 184 Cal.App.4th at p. 113.)
Appellants' assertion that none of this matters because of Code of Civil Procedure section 366.2 is meritless.
To the extent they are claiming the section 850 petition, itself, was untimely under Code of Civil Procedure section 366.2, they misread this survival statute of limitations. Code of Civil Procedure section 366.2 provides in pertinent part: "If a person against whom an action may be brought on a liability of the person, whether arising in contract, tort, or otherwise, and whether accrued or not accrued, dies before the expiration of the applicable limitations period, and the cause of action survives, an action may be commenced within one year after the date of death, and the limitations period that would have been applicable does not apply." (Code Civ. Proc., § 366.2, subd. (a), italics added.) Seaboard's section 850 petition, however, was aimed not at the decedent, Jack, but at the executors of Jack's estate, who refused to include property in the estate that Jack had owned, and at Mark, who claimed to own the real property the executors refused to include in the estate. In other words, the section 850 petition did not claim that Jack had committed a tort or breached a contract. Rather, it sought a determination as to ownership of property that Seaboard claimed should be included in Jack's estate. As Division Four of this court explained in Estate of Yool (2007) 151 Cal.App.4th 867, Code of Civil Procedure Code section 366.2 is inapplicable where the ownership of estate property is at issue. (Estate of Yool, at pp. 875-877.)
To the extent appellants are attempting to reach back further and claiming Seaboard could not possibly be an "interested" person because, under Code of Civil Procedure section 366.2, it never should have been allowed to file a late creditor's claim, it is far too late in the day for them to be advancing this assertion. They could have, and should have, raised Code of Civil Procedure section 366.2 as a limitations defense to Seaboard's amended civil complaint filed in August 2007. Not only did they not raise this asserted limitations bar to the validity of Seaboard's claim for damages arising from Jack's breach of fiduciary duties to the conservatee, but they allowed a default judgment in excess of $135,000 to be entered against Karen, Randy and Harvey, as the executors of Jack's estate. That judgment is long since final, and they are barred from taking issue with the timeliness of Seaboard's claim at this late date. (See Estate of Horman (1971) 5 Cal.3d 62, 72 [failure to assert affirmative defense, bars litigation in subsequent case between same parties]; Hall v. Chamberlain (1948) 31 Cal.2d 673, 679 [if statute of limitation is not pleaded it is waived]; Philbrick v. Huff (1976) 60 Cal.App.3d 633, 642 [same].) In fact, appellants never made any effort to challenge the 2004 order granting Seaboard's petition to file a late creditor's claim at the time it was made, even though Mark opposed that petition on grounds the Seaboard's claim was untimely under Code of Civil Procedure section 366.2.
Furthermore, even if appellants could challenge the timeliness of Seaboard's creditor's claim at this juncture, they have not provided a record demonstrating that the probate court erred in allowing the late filing. Here is what we know about the history of Seaboard's creditor's claim: In March 2003, Seaboard filed a petition for leave to file a late claim. As we have recited, Seaboard claimed it had not been given notice of the probate estate and also claimed appellants should be equitably estopped from asserting any limitations period. Mark objected, even though he was not an executor of his father's probate estate, on two grounds—that Seaboard was not a known or reasonably ascertainable creditor and its petition was time-barred under Code of Civil Procedure section 366.2. One year after Seaboard filed its petition to file a late claim, the probate court, in March 2004, held an evidentiary hearing and granted leave to file the creditor's claim. A transcript of this hearing is not in the record before us. The substance of the court's order granting leave to file the claim states only, "[u]pon consideration of the pleadings, documentary evidence and briefs of all parties, due notice having been given and good cause appearing, it is hereby ordered: The Petition for Leave to file a late claim is granted."
As we have discussed, Code of Civil Procedure section 366.2 provides in pertinent part: "If a person against whom an action may be brought on a liability of the person, whether arising in contract, tort, or otherwise, and whether accrued or not accrued, dies before the expiration of the applicable limitations period, and the cause of action survives, an action may be commenced within one year after the date of death, and the limitations period that would have been applicable does not apply." (Code Civ. Proc., § 366.2, subd. (a).)
However, Code of Civil Procedure section 366.2 subdivision (b) of the statute provides an exception to this one-year period for creditor claims filed in probate proceedings. This exception states: "The limitations period provided in this section for commencement of an action shall not be tolled or extended for any reason except as provided in any of the following, where applicable: [¶] . . . [¶] (2) Part 4 (commencing with Section 9000) of Division 7 of the Probate Code (creditor claims in administration of estates of decedents)." (Code Civ. Proc., § 366.2, subd. (b)(2).)
Thus, while Code of Civil Procedure section 366.2 provides "[a] uniform one-year statute of limitations, running from the date of decedent's death, [and] applies to all actions on personal liability claims against the decedent that survive decedent's death," the statute can be tolled by a section 9103 petition to file a late claim. (Ross et al., Cal. Practice Guide: Probate (The Rutter Group 2017) ¶ 8:19.3, pp. 8-17 to 8-18, italics omitted; Estate of Yool, supra, 151 Cal.App.4th at p. 872 ["The Code of Civil Procedure section 366.2 limitation period may be tolled by the timely filing of a creditor's claim or a petition to file a late claim, among other events."]; see Tulsa Professional Collection Services, Inc. v. Pope (1988) 485 U.S. 478, 490-491; Bradley v. Breen (1999) 73 Cal.App.4th 798, 802-803 (Bradley).)
Section 9103, in turn, states in pertinent part: "Upon petition by a creditor or the personal representative, the court may allow a claim to be filed after expiration of the time for filing a claim provided in Section 9100 if either of the following conditions is satisfied: [¶] (1) The personal representative failed to send proper and timely notice of administration of the estate to the creditor, and that petition is filed within 60 days after the creditor has actual knowledge of the administration of the estate. [¶] (2) The creditor had no knowledge of the facts reasonably giving rise to the existence of the claim more than 30 days prior to the time for filing a claim as provided in Section 9100, and the petition is filed within 60 days after the creditor has actual knowledge of both of the following: [¶] (A) The existence of the facts reasonably giving rise to the existence of the claim. [¶] (B) The administration of the estate." (§ 9103, subd. (a)(1), (2)(A) & (B).) "Moreover, when the decedent's representative has induced a claimant not to file a suit within the limitations period of section 366.2, the doctrine of equitable estoppel may be applied to toll the statute." (Bradley, supra, 73 Cal.App.4th at p. 803.)
As we have recited, the grounds of Seaboard's petition to file a late claim included that appellants gave no notice of Jack's probate proceeding and it received actual notice of the proceeding within 60 days prior to filing its petition, and that appellants should be equitably estopped from raising the limitations period because "despite being served with repeated demands to recoup any losses to their father's surety; each fiduciary actively concealed the commencement of their father's Estate proceeding from the Deceased's surety." Either of these grounds was a proper ground for granting Seaboard's petition.
We must presume that the probate court acted in accordance with the law (Denham v. Superior Court of Los Angeles County (1970) 2 Cal.3d 557, 564), and it is the burden of the party challenging a judgment or order on appeal to provide a record that affirmatively shows error. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1140-1141; Ballard v. Uribe (1986) 41 Cal.3d 564, 574-575; Pringle v. La Chapelle (1999) 73 Cal.App.4th 1000, 1003.) Appellants have failed to provide us with such a record here.
Appellants' reliance on Bradley is misplaced. In that case, after the decedent was convicted of lewd acts with a minor, the minor filed a civil action against him. (Bradley, supra, 73 Cal.App.4th at p. 800.) Four years after his death, the minor filed a second personal injury action against other individuals, alleging he had not been aware of their part in causing his injuries until one year before he filed the second lawsuit. (Ibid.) These individuals cross-complained against the decedent's estate and others for indemnification. The estate demurred on the ground the cross-complaint was time-barred by section 366.2. (Bradley, at pp. 800-801.) The trial court sustained the demurrer without leave to amend. The Court of Appeal affirmed, stating "the only conclusion possible from the plain and unambiguous language of section 366.2 is that it applies to bar appellants' action for equitable indemnity, regardless of whether that action has accrued under ordinary rules applicable to such claims." (Id. at pp. 804-805.) In Bradley, however, the individuals had not filed a section 9103 petition to file a late claim. (Bradley, at pp. 800-803.) Nor is there any discussion in Bradley of equitable estoppel. The record before us is therefore readily distinguishable.
Granting Leave to Amend to Conform to Proof
Appellants contend the trial court erred in granting Seaboard leave to amend its section 850 petition to conform to proof. Appellants assert the amendment to add a damages request pursuant to section 859 was a new cause of action and should not have been allowed, violated California Rules of Court, rule 3.1324 and violated their due process rights, and that Seaboard did not act in good faith in seeking to amend.
Granting leave to amend to conform to proof during trial is within the sound discretion of the trial court and we will not disturb it on appeal absent a clear showing of abuse. (Garcia v. Roberts (2009) 173 Cal.App.4th 900, 909.)
Section 859 provides "If a court finds that a person has in bad faith wrongfully taken, concealed, or disposed of property belonging to . . . the estate of a decedent . . . the person shall be liable for twice the value of the property recovered by an action under this part. . . . The remedies provided in this section shall be in addition to any other remedies available in law to a person authorized to bring an action pursuant to this part." (§ 859, italics added.)
Appellants acknowledge "[n]o reported case that [they] are aware of has affirmatively stated that a claim for double damages under section 850 is a separate 'cause of action.' " Indeed, imposition of section 859 damages is not a new cause of action; rather "[t]he section 859 penalty is imposed when an interested party establishes both that the property in question is recoverable under section 850 and that there was a bad faith taking of the property." (Hill v. Superior Court (2016) 244 Cal.App.4th 1281, 1290 (Hill).) We therefore reject appellants' assertion that Seaboard belatedly asserted a new cause of action.
Also, despite appellants' assertion to the contrary, the double damages recoverable under section 859 are not "punitive damages." "The proof required for punitive damages includes that plaintiff show oppression, fraud, or actual malice. [Citations.] Section 859 does not." (Hill, supra, 244 Cal.App.4th at p. 1287; see Estate of Young (2008) 160 Cal.App.4th 62, 88 [stating in dicta (rejected by Hill) that section 859 damages were "punitive in nature"].) Thus, we need not address appellants' contention that they were prejudiced or that their due process rights were violated by Seaboard's failure to plead with the particularity required in fraud allegations or for failure to give notice required when seeking punitive damages.
As for appellants' contention that the probate court violated California Rules of Court, rule 3.1324, that rule is inapplicable as it applies to motions to amend before trial. Here, Seaboard's motion was made after trial to conform to proof.
Finally, as for appellants' assertion that Seaboard did not act in good faith, they acknowledge the "general principle that the rules is that amendments should be liberally granted," so long as there is no prejudice to the opposing party results. In seeking leave to amend, Seaboard asserted appellants would not be prejudiced, as the court "has already heard from all witnesses that have relevant information on the Respondents' bad faith wrongful taking." The court, in turn, stated in its order granting leave to amend that the "proposed amendment does not seek to add any new or different claims, nor does it reply [sic] on any evidence not already received during trial of the subject petition."
In short, appellants have not shown any prejudice, and the court did not abuse its discretion in granting leave to amend to conform to proof. (See Singh v. Southland Stone, U.S.A., Inc. (2010) 186 Cal.App.4th 338, 354-355.)
The New Trial Motion
Two weeks after judgment in favor of Seaboard was finally entered, appellants filed a notice of intent to move for a new trial. In support of their new trial motion, they filed a declaration by Harvey claiming to have just discovered a locked safe belonging to their parents, which had been hidden for over 14 years in a closet in their house. It is unclear exactly when Harvey first discovered this safe. Appellants claimed the safe was first opened on November 19, one day after entry of the original judgment, and asserted the process of going through the papers therein had been slow. They claimed these documents "establish[ed] that all of the funds used for the purchase of the San Lorenzo properties came from loans secured by properties legally held by Harvey."
Seaboard responded with an ex parte application pursuant to section 7220, to strike the motion, which the court granted. Appellants contend the court abused its discretion by failing to re-open the evidence or to grant a new trial given this supposed new evidence.
Section 7220 provides: "In proceedings under this code concerning the administration of the decedent's estate, a motion for a new trial may be made only in the following cases: [¶] (a) Contest of a will or revocation of probate of a will. [¶] (b) Cases in which a right to jury trial is expressly granted, whether or not the case was tried by a jury." (§ 7220, subds. (a) &(b).)
Appellants first contend section 7220 is inapplicable because a section 850 proceeding "is a proceeding outside of the administration of the decedent's estate, [but rather is] for the purpose of establishing whether a particular property is property of the estate that would be subject to administration." They secondly contend, since section 7220 is now in division 7 of the Probate Code, and in 2001 the Legislature consolidated and recodified certain provisions of the code, including changing former Probate Code section 9860 which was under division 7 to current section 850 which is now under division 2, the Legislature must have intended to remove section 850 from the ambit of section 7220. Third, they contend that since a quiet title action is akin to a section 850 petition and they would have had the right to make a new trial motion in a quiet title action, there is "no logical reason to deviate from that procedure where the Petitioner elects to bring the quiet title action under Section 850 rather than in a civil action."
The language of section 7220 is clear—probate courts are without jurisdiction to entertain new trial motions except in will contests and cases where a jury trial is expressly granted. Neither circumstance existed here. Had the Legislature meant to restrict section 7220 to division 7, or to exclude section 850, it could have done so. It did not do so. "In the first step of the interpretive process we look to the words of the statute themselves. [Citations.] The Legislature's chosen language is the most reliable indicator of its intent because ' "it is the language of the statute itself that has successfully braved the legislative gauntlet." ' [Citations.] We give the words of the statute 'a plain and commonsense meaning' unless the statute specifically defines the words to give them a special meaning. [Citations.] If the statutory language is clear and unambiguous, our task is at an end, for there is no need for judicial construction." (MacIasaac v. Waste Management Collection & Recycling, Inc. (2005) 134 Cal.App.4th 1076, 1082-1083.)
Even if the probate court could have entertained a new trial motion, appellants cannot establish prejudice, as the record leaves no doubt that the court would have denied a new trial.
Code of Civil Procedure section 657, subdivision (4) provides that a party may move for a new trial upon a showing that there is "[n]ewly discovered evidence, material for the party making the application, which he could not, with reasonable diligence, have discovered and produced at the trial." "[T]he moving party must provide a ' " 'satisfactory explanation for the failure to produce that evidence at an earlier time.' " ' " (Shiffer v. CBS Corp. (2015) 240 Cal.App.4th 246, 255.)
While appellants claim the "safe had laid [sic] hidden" since their parents' death, they admitted it was located in a closet in a home where Harvey had lived since 1960 and where he had continued to reside for 14 years during which the probate proceeding had been lumbering through the probate court. There is no evidence appellants could not have found the safe with reasonable diligence. In his declaration, Harvey asserted he had "been largely bedridden" for the past 30 years. He also claimed, however, that he "diligently searched for all documents in [his] possession, custody or control that related" to the San Lorenzo properties. Moreover, he made no effort to explain why his siblings did not or could not have helped him with whatever search revealed the safe at the eleventh hour.
In short, appellants did not begin to make a record that would have supported granting a further trial or a new trial on the basis of the new-found safe and documents therein.
Bad Faith
Section 859 permits a court to award double damages when it finds "a person has in bad faith wrongfully taken, concealed, or disposed of property belonging to . . . the estate of a decedent. . . ." "Bad faith" is not defined in the Probate Code. However, in Hill, supra, 244 Cal.App.4th at page 1287, the court held "bad faith" under section 859 does not require a showing of malice. Similarly, in other contexts, most commonly, in the insurance and contract law contexts, bad faith does not require a showing of malice, but rather bad faith occurs when a party acts "unreasonably or without proper cause." (Chateau Chamberay Homeowners Assn. v. Associated Internat. Ins. Co. (2001) 90 Cal.App.4th 335, 347, italics omitted.) Bad faith may " 'consist of inaction,' " including a " 'lack of diligence and slacking off.' " (R.J. Kuhl Corp. v. Sullivan (1993) 13 Cal.App.4th 1589, 1602, citing Rest.2d Contracts, § 205, com. d.)
From what we can deduce from appellants' brief, they contend there was no evidence of bad faith.
The court's statement of evidence spells out otherwise. For example, the court found appellants "fail[ed] to file a true and complete I&A even after being directed by the court during 2009" and they "also did not file an I&A even when ordered to do so by the trial court in its rule dating January 21, 2015. The failure and refusal to file a complete and accurate I&A amounts to the concealment of the assets of the estate so as to facilitate their taking." The court also pointed to the fact the executors and Mark "recorded a deed stating that they were joint tenants of the Washington Avenue property," and then transferred that property to Mark's company M.O.R.E. Partners LLC all without court permission. Additionally, in regards to the San Lorenzo properties, the court found "[t]he assertion of a claim of adverse possession in regard to the Properties by Mark and Harvey and with the approval and support of the other Executors also amounts to a taking." In regard to personal property, the court found the tax return for Jeanette's estate "listed liquid assets in the form of community property stocks and bonds valued at approximately $280,929 which have never been the subject of an accounting" in either of the parents' estates. "An equivalent amount representing Jack's share of community property has never been listed on any I&A and also constitutes a hiding, taking or disposing of property of the Jack estate." "Accordingly," the court found "Mark and the Executors have engaged in bad faith, wrongful conduct to hide, conceal and dispose of the assets of the Jack Ottovich Estate."
All of these findings are supported by evidence in the record. Appellants do no more than reargue the evidence they claim supports their view. But that is not a proper basis for a substantial evidence challenge. (Service Employees Internat. Union v. County of Los Angeles (1990) 225 Cal.App.3d 761, 769-770, superseded by statute on another ground as stated in Guerrero v. Superior Court (2013) 213 Cal.App.4th 912, 951; Estate of Gerber (1977) 73 Cal.App.3d 96, 112-113.) The probate court sat as the trier of fact, and we will not overturn its assessment of the credibility of the witnesses or its findings and inferences drawn from all of the evidence presented.
At oral argument, counsel for appellants directed our attention to copies of exhibits attached to their reply brief, which appellants contend show that Harvey and Mark were the true purchasers of the San Lorenzo properties. What these exhibits show is that Harvey provided some of the collateral that secured a loan, a "Piggy Back Line of Credit was granted to Jack and Harvey," and Jack made a $15,000 deposit on the properties. The trial court also considered this evidence, as it stated in its statement of decision and corrected judgment that it considered all the evidence the parties presented, and in fact, it specifically referenced some of these exhibits. But it was not persuaded that these exhibits established that Jack and Jeanette were not the owners of the property and took title solely as placeholders for Mark. On the contrary, the court found, among other things, that: (1) Mark and Harvey had, at various times in other proceedings, made representations that they either had "no legal, equitable or other interest in any real property," or did "not claim any interest in the San Lorenzo properties"; (2) Jack and Jeanette never acknowledged any claim of ownership by Mark or Harvey and such claims were at odds with Jack's and Jeanette's estate plans, which otherwise divided all assets among the four siblings; (3) Jack and Jeanette were actively involved in the properties up until their deaths, and all rents and incomes went into Jeanette's bank account and she in turn "paid all expenses relating to the Properties"; (4) Mark had previously testified under oath that he had no income, filed no tax returns, and never paid taxes on any rental income; (5) the evidence was "consistent with Mark being an agent for his parents during the purchase of the Properties"; and (6) the purchase price came, in part, from a bank loan signed by Jack and Harvey and secured by property that Jack averred he owned in the underlying application. All of these findings are supported by the evidence in the record, including Mark's testimony at trial that he did not know where the purchase money came from, two other deposits for the properties made by Jack in the amounts of $48,768.76 and $176,224.82, and the properties having been listed in Jeanette's estate as community property.
Attorney Fees
Based on their contention that the court erred in allowing Seaboard to amend to conform to proof, appellants also contend Seaboard was not entitled to attorney fees. However, as we have discussed above, the court did not abuse its discretion in allowing leave to amend. Accordingly, we do not discuss this issue further. Damages for Money , Stocks and Annuities Listed on Jeanette's Tax Return
The probate court found appellants jointly and severally liable to their father's estate in the amount of $2,113,383. This included $280,929 in personal property in the form of money, stocks and annuities "at the date of his death." Appellants contend Seaboard's section 850 petition mentioned only real property and thus the probate court erred in finding Jack's estate also included these various items of personal property. They further claim $280,929 was a number Seaboard got "out of thin air," and even if that figure was "based in the record," Jack was only entitled to an undivided half interest under California community property laws.
Seaboard's amended section 850 petition asked the court to award "such other and further relief as the Court deems proper." Section 859 states, in pertinent part, that: "The remedies provided in this section shall be in addition to any other remedies available in law to a person authorized to bring an action pursuant to this part."
Furthermore, section 856 provides in pertinent part: "[I]f the court is satisfied that a conveyance, transfer, or other order should be made, the court shall make an order authorizing and directing the personal representative or other fiduciary, or the person having title to or possession of the property, to execute a conveyance or transfer to the person entitled thereto, or granting other appropriate relief." (Italics added.) "Section 856 clearly and unambiguously grants the probate court the power not only to order a conveyance or transfer to the person entitled to the property in question, but also to grant other appropriate relief. Even apart from the statutory authority, the probate court is a court of general jurisdiction [citations] with broad equitable powers. [Citations.] The probate court has jurisdiction to determine whether property is part of the decedent's estate or living trust. . . . The probate court may apply general equitable principles in fashioning remedies and granting relief." (Kraus, supra, 184 Cal.App.4th at pp. 113-114, italics omitted; id. at p. 111 [" 'Section 850 et seq. provides a mechanism for court determination of rights in property claimed to belong to a decedent or another person.' [Citation.] The statutory scheme's 'evident purpose' is to carry out the decedent's intent and to prevent looting of estates."], citing Estate of Young, supra, 160 Cal.App.4th at pp. 75, 92.)
Contrary to appellants' assertion that "alternate" values were used, the trial court specified in its November 20 corrected judgment that the values given to the assets were "at the date of his death." On Jeanette's form 706 tax return, the following values at the date of her death—only three months prior to Jack's—are listed: schedule B lists $184,516 (stocks and bonds); schedule C $9,817 (mortgages, notes and cash); schedule D $7,194 (life insurance); schedule F $11,140 (other miscellaneous property), and schedule I $68,027 (annuities) which totals to $280,694. Seaboard acknowledges the court's $280,929 figure "appears to be off by $235."
In support of appellants' assertion that annuities and life insurance "are traditionally nonprobate assets," they cite section 5000 and Estate of Petersen (1994) 28 Cal.App.4th 1742, 1751 (Petersen). Section 5000 states, in pertinent part: "A provision for a nonprobate transfer on death in an insurance policy . . . or other written instrument of a similar nature is not invalid because the insurance does not comply with the requirements for execution of a will, and this code does not invalidate the instrument." (§ 5000, subd. (a).) In Petersen, the court held that the language in the annuity contracts at issue, which stated " 'If there is more than one owner, at the death of the first owner payment will be made to the surviving owner. If the deceased owner's spouse is the surviving owner, then the surviving spouse will become the owner,' " was sufficient to establish a nonprobate transfer of funds to the surviving spouse. (Petersen, at pp. 1748, 1751-1752.)
But here, in connection with Jack's estate, there is no surviving spouse. Furthermore, appellants have identified no evidence that the language of the annuities in question mirrored the language of those in Petersen. While appellants state there is "no evidence in the record who the named beneficiary was as to these assets," section 8901 states that "[t]he personal representative shall appraise the following property. . . : [¶] . . . [¶] (e) Proceeds of life . . . insurance policies and retirement plans and annuities payable on death in lump sum amounts." (§ 8901, subd. (e).) So, appellants, themselves, should have determined who the beneficiary was, and they are responsible for any supposed incompleteness in the record in this regard. In any case, they have identified no evidence suggesting the probate court erred in including the annuity and insurance proceeds in Jack's estate. We will order a correction of the judgment to reflect the apparent mathematical error of $235.
Damages for Rent
Appellants also contend the probate court erred in ruling that $175,762.50 in rent (including interest) received for the Lorenzo Avenue property should have been included in Jack's estate because rent was not mentioned in the section 850 petition. They further assert the court abused its discretion by not giving appellants offsets for monies expended on the property.
As we have discussed, the court was entitled to order relief as it deemed appropriate. (Kraus, supra, 184 Cal.App.4th at pp. 113-114.)
While appellants complain "no credit was ever given for the expenses paid for, and the improvements made on, the properties," they have not provided us with any authority that they are entitled to an offset. "Their failure to do so constitutes a waiver of the issue on appeal," as arguments presented by an appellant must be supported by both coherent argument and pertinent legal authority. (Berger v. California Ins. Guarantee Assn. (2005) 128 Cal.App.4th 989, 1007; see Cal. Rules of Court, rule 8.204 (a)(1)(B).)
The "Resulting Trust" Claims
The probate court rejected Mark and Harvey's resulting trust claims on four grounds: (1) appellants failed to establish a resulting trust by clear and convincing evidence; (2) the claims are barred by the statute of limitations; (3) Mark and Harvey have unclean hands; and (4) the claims were barred by laches. Appellants claim each and every one of these grounds is erroneous and unsupported.
" 'A resulting trust arises by operation of law from a transfer of property under circumstances showing that the transferee was not intended to take beneficial interest. [Citations.] Such a resulting trust carries out and enforces the inferred intent of the parties. [Citations.] "Ordinarily a resulting trust arises in favor of the payor of the purchase price of the property where the purchase price, or a part thereof is paid by one person and the title is taken in the name of another. [Citation.] 'The trust arises because it is the natural presumption in such a case that it was their intention that the ostensible purchaser should acquire and hold the property for the one with whose means it was acquired.' [Citations.]" ' [Citation.] In other words, the relationship between resulting trustee and beneficiary arises where one, in good faith, acquires title to property belonging to another." (Estate of Yool, supra, 151 Cal.App.4th at p. 874.)
" 'It is fundamental that where a judgment is attacked on the ground that it is not supported, the power of the appellate court ends when it shall once have determined that there is substantial evidence which will support the conclusions of the trial court.' [Citations.] And that rule is applicable where the action is one to enforce a resulting trust. Whether the evidence to prove the existence of the trust is clear, satisfactory and convincing 'is primarily a question for the trial court to determine, and if there is substantial evidence to support its conclusion, the determination is not open to review on appeal.' [Citations.] Likewise, in such cases the credibility and weight of the evidence are exclusively for the trial court." (Viner v. Untrecht (1945) 26 Cal.2d 261, 267; Baskett v. Crook (1948) 86 Cal.App.2d 355, 362 ["Clear and conclusive evidence is required to establish a resulting trust in either real or personal property."].)
Appellants assert "the uncontroverted evidence shows that Jack and Jeanette were part of the transaction and took tile [sic] to the property to assist with financing," pointing to Randy's testimony that Jack told him the San Lorenzo properties were Mark's, Karen's testimony that Jeanette was Mark's secretary, and Mark's testimony estimating how much money he spent on the properties (approximately $300,000).
Randy also testified, however, that he "didn't even know about the [San Lorenzo] properties" until after his father died, contradicting the testimony to which appellants point. That Jeanette and, then, Karen helped Mark out with some administrative tasks certainly does not mean Jack and Jeanette did not intend to hold a beneficial interest in the properties. Indeed, such assistance would have been in Jack and Jeanette's own interest. And while Mark claimed to have spent approximately $300,000 on the properties, he testified in a debtor's examination that he did not pay income or social security taxes, did not have a bank account, had no property in his name, and had "no income over the past 20 years." When asked if he was self-employed at any point, he invoked his Fifth Amendment right against self-incrimination. Furthermore, Karen testified that she gave Mark and Harvey a $450,000 loan from her portion of the trust "to work the properties and fix them up," eviscerating Mark's claim that only he and Harvey paid for expenses.
In short, given the conflicting testimony by appellants, themselves, and the nature of the contrary evidence they refuse to acknowledge, we can only observe that the probate court's rejection of Mark's and Harvey's resulting trust claims were supported by ample evidence. Since this ground, alone, supports the court's rejection of their claims, we need not, and do not, address the other three grounds on which the probate court also rejected the claims.
DISPOSITION
We order the judgment reduced by $235 to reflect the mathematical error as to the value of the personal property, and as modified, the judgment is affirmed. Respondent to recover costs on appeal.
/s/_________
Banke, J. We concur: /s/_________
Humes, P.J. /s/_________
Margulies, J.