Opinion
B302838 B304712
10-27-2021
Estate of CLARA ROSENTHAL, Deceased. v. MARK S. ROSENTHAL, as Executor, etc., Objector and Respondent. TIFFANY ST. IVES, Petitioner and Appellant,
Lewis Law, Patricia Lewis and Paul Kujawsky for Petitioner and Appellant. Weinstock Manion, Blake A. Rummel and Andrew G. Smith for Objector and Respondent.
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. 18STPB02712, Michael C. Small, Judge. Affirmed in part, reversed and remanded in part.
Lewis Law, Patricia Lewis and Paul Kujawsky for Petitioner and Appellant.
Weinstock Manion, Blake A. Rummel and Andrew G. Smith for Objector and Respondent.
RUBIN, P.J.
INTRODUCTION
At the heart of this case is the distribution of a mother's estate to her two children, a daughter and a son. The parties present us with several issues on appeal. Each of them is born from the mother's apparent decision to leave all of her stock holdings to son, and none to daughter.
After bringing an unsuccessful will contest, daughter Tiffany St. Ives brought a petition for reformation of the will under Probate Code section 11700. Tiffany sought to depose the attorney for her brother, respondent Mark Rosenthal. She also requested a forensic inspection of the will. The trial court granted Mark's protective order preventing the deposition of his counsel, denied Tiffany's forensic inspection request, and ultimately denied Tiffany's section 11700 petition for reformation. The court sanctioned Tiffany and her attorney for (1) opposing the request for a protective order, and (2) repeating an argument she had made several times during the probate proceeding, an argument the trial court had repeatedly rejected as barred by the doctrine of issue preclusion. The court then overruled Tiffany's objection to Mark's waiver of an accounting, and ordered distribution of the estate.
All further undesignated statutory references are to the Probate Code. Probate Code section 11700 provides: "At any time after letters are first issued to a general personal representative and before an order for final distribution is made, the personal representative, or any person claiming to be a beneficiary or otherwise entitled to distribution of a share of the estate, may file a petition for a court determination of the persons entitled to distribution of the decedent's estate. The petition shall include a statement of the basis for the petitioner's claim."
The parties refer to the siblings as Tiffany and Mark. We use the same nomenclature, intending no disrespect.
Tiffany argues the trial court abused its discretion in denying her discovery motions and sanctioning her. She also asserts that the central argument made in her section 11700 petition was not barred by issue preclusion. Finally, she contends the court erred in denying her an accounting before distribution.
We affirm the court's denial of Tiffany's discovery requests, the denial of her section 11700 petition, and the sanctions orders. Because the record does not unequivocally demonstrate the amount of cash in the estate at the time of distribution, we reverse the court's order denying Tiffany an accounting. We remand for an accounting of the cash assets, and for reconsideration of the cash distribution.
In appeal No. B302838, filed on December 4, 2019, Tiffany appealed from the court's order granting Mark's motion to quash the deposition notice of his attorney and for sanctions. In appeal No. B304712, filed March 2, 2020, Tiffany appealed from the court's order granting Mark's waiver of accounting and distributing the estate. We consolidated these two appeals for purposes of briefing, argument, and this opinion.
FACTS AND PROCEDURAL BACKGROUND A. Underlying Facts
1. Clara's Will
On November 22, 2001, Charles and Clara (parents to Mark and Tiffany) executed reciprocal wills. Both wills were partially handwritten by Charles, and signed by the respective testators. In general, they left their estates to one another, and then to their children.
In relevant part, Clara's will stated: "Should Charles Rosenthal predecease me, I leave my estate as follows, To my son Mark Rosenthal my house at 366 N. La Jolla Ave. and 6901-6905 Melrose Avenue, and 9319-9323 W Pico Blvd, Los Angeles, California and all my stocks and to my daughter Tiffany St. Ives the real property at 30460 Anthony Road, Valley Center, Ca. and I leave the remainder of my estate including bank accounts and monies to one half to my son Mark Rosenthal and one half to my daughter Tiffany St. Ives."
Charles' will contained virtually identical provisions, except for a reference to Clara predeceasing him. (The significance of the "slight" differences between the two wills, which we discuss below, was hotly contested.) Clara named Mark successor executor of her will, following Charles. Charles predeceased Clara, dying in April 2004. Charles' will was admitted to probate in 2005. The probate of Charles's will is not at issue in this appeal.
2. Clara's Conservatorship and Tiffany's Allowance
After suffering a stroke in 2007, Clara was placed under a conservatorship of her person and estate, with Mark appointed as her conservator. Prior to the conservatorship, Clara had been giving Tiffany $8,000 to 12, 000 monthly, continuing a practice first adopted years earlier by Clara and Charles. The monies were basically for Tiffany's living expenses and for the operation of an animal shelter she owned. When the conservatorship commenced, Mark temporarily stopped issuing the monthly allowance from Clara's personal account.
In 2007, Tiffany filed a petition for substituted judgment in the conservatorship proceeding. Tiffany, who was in her 60s and dependent on her parents' support for her entire adult life, sought a $10,000 monthly allowance from Clara's conservatorship. The trial court granted Tiffany a sliding scale allowance leveling out at $4,000 per month. Tiffany appealed the reduction and another panel of this court affirmed in St. Ives v. Rosenthal, B211626, 2010 WL 2839905. The parties for the most part discuss only two passages from the appellate opinion: the appellate court's description of the will as giving Mark all the stock holdings, and the trial court's order that Tiffany's family allowance from the conservatorship estate "will not be deducted from any inheritance."
"Under sections 2580 through 2586, a superior court may, upon the petition of any interested person and after consideration of all relevant circumstances, exercise its discretion to authorize or require a conservator to take a variety of different actions affecting the conservatee's estate. 'In essence the statute permits the court to substitute its judgment for that of a conservatee.'" (Conservatorship of McDowell (2004) 125 Cal.App.4th 659, 665, fn. omitted, disapproved on other grounds in Bernard v. Foley (2006) 39 Cal.4th 794, 816, fn. 14.)
The $4,000 per month appears to reflect Tiffany's actual monthly expenses.
Tiffany's attorneys from the conservatorship proceedings placed a $66,993.42 lien on the conservatorship property. In 2015, the court ordered Mark to pay these legal expenses with cash from the estate and to treat the funds as an advance against Tiffany's future inheritance. Mark paid the legal fees.
B. Tiffany's Will Contest and Petition for Allowance,
Mark's Waiver of Accounting
1. Will Contest
Clara died on March 10, 2018. Death of the conservatee terminates the conservatorship. Nonetheless, the court retains jurisdiction over the estate for the purpose of settling the accounts of the conservator or for any other purpose incident to the enforcement of the judgment and orders of the court upon such accounts. (Conservatorship of O'Connor (1996) 48 Cal.App.4th 1076, 1088-1089.) Ten days later, Mark filed a petition to probate Clara's will.
In June 2018, Tiffany filed a will contest, arguing that a juxtaposition of Clara's and Charles's wills revealed an ambiguity in the devise of the stocks. Tiffany asserted that Charles's will read: "I leave my real property located at 366 N La Jolla Ave. Los Angeles, California and 6901-6905 Melrose Avenue and 9319-9323 West Pico Blvd. to my son Mark Rosenthal end my stocks and to my daughter Tiffany St. Ives the real property [at] 30460 Anthony Road, Valley Center . . . ." By comparison, Clara's will stated that Clara left to Mark the Melrose and West Pico properties "and all my stocks." Tiffany argued that because the wills were intended to mirror each other, the "end/and" disparity between the wills created an ambiguity in Clara's intent for the distribution of the stocks.
On June 22, 2018, the trial court denied the will contest and admitted Clara's will to probate, appointing Mark as executor. In denying the contest, the trial court found that Tiffany's allegation of mistake in Clara's will was not a proper ground for denying probate. The trial court ruled that "the alleged ambiguity in [Charles's] will is not an ambiguity; it is plainly a misspelling of the word 'and' as 'end' and nothing more."
Tiffany appealed the trial court's order denying her will contest, but then abandoned the appeal on December 28, 2018.
2. Tiffany's Petition for a Family Allowance and Construction Expenses
On July 24, 2018, Tiffany petitioned for a family allowance pursuant to section 6540, et seq., in the probate proceeding. Tiffany sought a family allowance of $4,000 per month from Clara's estate for one year, the same amount she had received from the conservatorship. Tiffany also asked the court to order Clara's estate to pay construction costs for her residence. The conservatorship had earlier been ordered to pay these expenses but failed to do so.
3. Mark's Wavier of an Accounting and Petition for Final Distribution
On October 25, 2018, Mark filed an inventory and appraisal of Clara's estate showing cash in multiple bank accounts totaling $212,308.91. The inventory also included various pieces of real estate and stock investments. Mark valued the total estate at $8,530,002.71.
On February 6, 2019, while Tiffany's request for an allowance was pending, Mark filed a "Waiver of Account and Report of Executor; Petition for Statutory Attorney Fees, Reimbursement of Costs Advanced & Final Distribution" (the final report). Mark's filing was an attempt to close Clara's Estate following the court's ruling on Tiffany's family allowance petition.
An exhibit attached to the final report listed cash assets of $342,727.24, as of December 2018, approximately $130,000 more than what Mark reported in his petition. The December accounting listed a Union Bank account containing $139,183.22, which was not reflected in Mark's October accounting.
In the final report, Mark pointed out that the trial court in the conservatorship proceeding had previously ordered the conservatorship estate to satisfy a $66,993.42 lien that Tiffany's prior attorneys had placed on certain real property owned in part by the conservatorship estate. This payment was ordered to be charged against Tiffany's inheritance. Mark asserted that, as of the date of Clara's death, and taking into account the $66,993.42 advance against Tiffany's share, there was no remaining residue of Clara's Estate distributable to Tiffany.
Tiffany filed objections to the final report on June 17, 2019, arguing she had not waived an accounting from the estate and was due one. She also re-asserted the argument made in her will contest that she (not Mark) was entitled to Clara's stocks due to a mistake in Clara's will. Tiffany claimed this mistake was evidenced by the use of the word "end" in Charles' will and "and" in Clara's will.
At a June 20, 2019 hearing, the trial court overruled Tiffany's objections to final report. The court admonished Tiffany for repeating the "end/and" argument regarding the stocks that the court had already ruled on in the will contest. The court found that the cash residue of Clara's estate was $212,000. The court concluded that after the estate residue was reduced by the payment of the $105,000 in construction costs, which was ordered during the conservatorship, and taking into account the $66,993.42 advance to pay Tiffany's former attorney from the conservatorship proceeding, Tiffany's half of the remaining residue was already consumed. The court approved the waiver of accounting at the June 20, 2019, hearing.
It appears that the construction expenses had been estimated to cost at most $105,000. As we explain in the next section, the court formally ordered Mark to pay this amount out of the estate to Tiffany to cover the costs that should have been paid out of the conservatorship estate.
The trial court issued its written order approving Mark's waiver of accounting on January 13, 2020.
4. Ruling on Tiffany's Family Allowance and Construction Expenses
Two weeks later, on July 3, 2019, the trial court issued a detailed statement of decision on Tiffany's family allowance and construction expenses. The trial court granted Tiffany a $4,000 per month allowance from the estate retroactive to January 3, 2019 for one year, or until Clara's estate closed, whichever occurred first. The trial court further ordered Mark, as executor of Clara's estate, to pay $105,000 to Tiffany for the construction costs.
The statement of decision then discussed the history of the proceedings and the timing of the closure of probate:
"As to the timing of the closure of the Probate Estate, the court held its initial hearing on the Final Report on May 3, 2019. At the hearing, Tiffany stated that she intended to object to the Final Report. The Court warned Tiffany, however, that if the Court found her objections to the Final Report to be groundless, then the Court would surcharge her $4,000 per month for the amount of time that her objections delayed the closing of the Probate Estate. The Court reiterated this warning at a May 24, 2019 hearing on the motion of Tiffany's attorney, Vikram Brar, to be relieved as counsel for her. In support of his motion, Brar stated that Tiffany had instructed him to make an objection to the Final Report that Brar considered groundless. The Court queried Tiffany about this at the May 24, 2019 hearing. The Court understood Tiffany's response to be that her planned objection to the Final Report would essentially repeat the arguments she made in her unsuccessful contest to the will. The Court admonished Tiffany that any objection to the Final Report that covers the same terrain as her Will contest would be groundless, thus triggering a surcharge of $4,000 per month for the amount of time that her objection to the Final Report delayed closing of the Probate Estate."
The court continued that in June, Tiffany made frivolous objections to the final report that mirrored the will contest arguments, but that the court did not surcharge her because by denying the objections on the spot, the court prevented any delay from occurring.
C. Tiffany's Section 11700 Petition, Subpoena of Mark's Counsel, and Will Inspection Request
On July 30, 2019, Tiffany filed a "Petition of Tiffany St. Ives to Determine Distribution Rights" pursuant to Probate Code section 11700. In the petition, Tiffany argued that the portion of Clara's will pertaining to the disposition of the stocks should be reformed pursuant to Estate of Duke (2015) 61 Cal.4th 871 (Duke). Duke held that "an unambiguous will may be reformed to conform to the testator's intent if clear and convincing evidence establishes that the will contains a mistake in the testator's expression of intent at the time the will was drafted, and also establishes the testator's actual specific intent at the time the will was drafted." (Id. at p. 898.) Tiffany argued that Clara intended for Tiffany to receive all the stocks as shown by statements from her former attorney and Mark's attorney. Tiffany attached a declaration from her former attorney Kim Kakadelas stating that in 2007, Kakadelas had a conversation with Mark's counsel Brian N. Sterzer, who relayed that Tiffany would receive the stocks under Clara's will. To support her contention that there was a mistake in Clara's expression of intent, Tiffany repeated the "and/end" argument regarding the distribution of the stocks. Tiffany argued that this purported ambiguity showed she is entitled to all of Clara's stocks. In a subsequent filing, Tiffany also supported her petition with Mark's testimony from the conservatorship proceedings, where he stated that Clara was" 'concerned about taking care of Tiffany's basic necessities, such as food and medical attention.' "
1. Denial of Request for Forensic Inspection of the Will
On September 16, 2019, Tiffany filed a "Drop Off Ex Parte Application for Order to Inspect Wills." In this filing, Tiffany requested her forensic document examiner be given access to Charles's and Clara's original wills. Mark opposed the request, asserting "there is nothing that the proposed forensic document examiner could find in her examination of Clara's and Charles' Wills that could possibly affect the outcome of the [distribution] petition."
On September 30, 2019, the trial court denied Tiffany's inspection request without prejudice; the court did not elaborate on its reasons. At a later hearing, the trial court explained, "a handwriting expert is not going to be able to prove that Clara intended in November 22[], 2001, to give 100 percent of the stocks to Tiffany."
It appears Tiffany sought to have the handwriting expert testify that Charles wrote the terms of Clara's will. That point does not appear to be in dispute.
2. Court Granted Mark's Motion to Quash; Sanctioned Tiffany and Her Counsel
In support of her section 11700 petition, on August 26, 2019, Tiffany issued subpoenas for the deposition of, and documents from Mark's attorney Sterzer. (We discuss the motions and proceedings related to the Sterzer subpoena in the next section.)
On September 17, 2019, after Tiffany had refused to withdraw the Sterzer deposition notice, Mark moved to quash the deposition, for a protective order, and for sanctions. Mark asserted that it was presumptively improper for a party to depose opposing counsel, citing Carehouse Convalescent Hospital v. Superior Court (2006) 143 Cal.App.4th 1558, 1562 ("Depositions of opposing counsel are presumptively improper, severely restricted, and require 'extremely' good cause-a high standard."). Mark explained Sterzer did not have testimony or documents relevant to the analysis of Clara's will per Estate of Duke, as Sterzer was not involved in drafting any testamentary documents for Charles or Clara. Indeed, Sterzer had never even met Charles. Clara had retained Sterzer in 2005 during the probate of Charles's estate. In 2007, after Clara's stroke, Sterzer ceased his representation of Clara and became Mark's attorney, assisting Mark in his effort to become Clara's conservator. Sterzer had continuously represented Mark ever since. In a sworn declaration, Sterzer attested to his representation and that he had no memory of any conversation with Kakadelas (the attorney for Tiffany) in 2007 regarding the stock investments.
Tiffany opposed Mark's motion. She argued that Sterzer was Clara's counsel when she was alive and had information regarding Clara's testamentary intent. Tiffany asserted that when she asked Sterzer why Charles's will looked unequal in its devise, Sterzer disagreed and said the stocks were going to Tiffany.
On October 23, 2019, the trial court heard argument and granted Mark's motion. The trial court stated: "it's presumptively improper to depose the other side's counsel, and I don't believe that Tiffany has met the high standard to overcome that presumption." The court explained that Tiffany admitted "Sterzer's deposition is one piece of the evidence," and thus "the deposition is not crucial." The trial court also found the evidence sought by Tiffany from Sterzer "is unrelated to the interpretation of Clara's will."
Pursuant to Code of Civil Procedure section 2025.420(b)(1), the trial court imposed a protective order preventing Tiffany from deposing Sterzer. Pursuant to Code of Civil Procedure sections 2023.010(a), (c) and 2025.420(h), the trial court sanctioned Tiffany and her counsel jointly and severally in the amount of $10,095.00.
3. Ruling on Issue Preclusion
Taking a slight detour in our chronology, at the first hearing on the distribution petition on October 8, 2019, the trial court warned Tiffany's counsel that by repeating this "and/end" argument, "[y]ou're risking that your client is going to get surcharged, $4,000 a month for every month that her [section] 11700 petition, if I find it in the end that it is groundless and barred by the doctrine of res judicata, for every month that you delayed the closing of the Estate, $4,000."
At this hearing, the trial court invited Tiffany to brief whether the arguments in her distribution petition were barred by the doctrine of res judicata in light of the trial court's previous order denying the will contest. In her brief, Tiffany argued that the ruling on the issue of the "and/end" argument in the will contest "was not final" and thus res judicata did not apply. Mark responded to Tiffany's argument, asserting that all the elements of issue preclusion were satisfied.
The hearing on res judicata took place on December 10, 2019. The trial court held that Tiffany's "and/end" argument regarding Clara's will "is barred under the issue preclusion prong of res judicata also known as collateral estoppel," because the trial court "has already ruled that there is no ambiguity there." The trial court limited its res judicata ruling specifically to the "and/end" ambiguity argument: "Tiffany is not, however, collaterally estopped from asserting the mistake argument in her 11700 petition because collateral estoppel requires that an issue actually be decided in a prior action," and in denying the will contest, the trial court "did not decide that there was no mistake in Clara's [w]ill."
4. Mark's Sanctions Motion for the Frivolous Section 11700 Petition
On December 6, 2019, Mark moved to sanction Tiffany and her counsel, pursuant to Code of Civil Procedure sections 128.5 and 128.7. He argued that Tiffany's section 11700 will reformation petition was entirely frivolous, especially the portion that repeated the "end/and" ambiguity argument. Mark sought a total of $56,432.50 in sanctions against Tiffany and/or her counsel.
Tiffany opposed the motion, arguing that her filings were neither in bad faith nor frivolous because she needed the stocks to support herself. Tiffany did not address the repetitiveness of her "end/and" argument. She too sought sanctions in the amount of $1,500 if she prevailed in her opposition.
5. Trial Court Ruling on Section 11700 Petition
On December 17, 2019, the trial court issued its tentative decision to deny Tiffany's section 11700 petition without an evidentiary hearing. It deferred a final decision until the next hearing. In its tentative the court explained in detail why Tiffany's proffered evidence failed under Duke to show any "specific intent" by Clara to bequeath her stocks to Tiffany at the time Clara signed her will. The trial court continued that, at most Tiffany was referring to Charles's and Clara's "general intent," namely "that Clara and Charles intended their wills to be mirror images of each other and intended their children to share equally in the stocks." The trial court concluded Duke did not cover that situation.
"The charities' theory, which sets forth a specific disposition of assets Irving allegedly intended when he wrote his will, distinguishes this case from circumstances in which it is alleged that the testator had a more general intent regarding the disposition of the estate, which was not accomplished by the will as written. An example of an error involving general intent would be a case in which a testator intended in his or her will to provide adequate resources to one of the will's beneficiaries to support that beneficiary for a lifetime, but the specific gift set forth in the will proves to be inadequate for that purpose. Thus, that will accurately sets forth the testator's specific intent with respect to the distribution of assets, but due to a mistake with respect to the value of those assets or the needs of the beneficiary, the will fails to effect the testator's intent to provide adequate assets to support the beneficiary. In contrast to cases in which the alleged error is in the rendering of the specific terms intended by the testator, cases in which the alleged error is in failing to accomplish a general intent of the testator would require a court to determine the testator's putative intent: if the testator had known of the mistake, how would the testator have changed the will? The case before us presents only the issue of whether a will may be reformed when extrinsic evidence establishes that the will fails to set forth the actual specific intent of the testator at the time the will was executed, and we express no opinion on the availability of reformation in cases involving claims of general and putative intent." (Estate of Duke, supra, 61 Cal.4th 871, 897-898, italics added.) The trial court expressly referred to page 897 of the Duke opinion which states in part:
At the next hearing on January 8, 2020, the trial court confirmed its reasoning and denied the reformation petition. The trial court explained why none of "the evidence that Tiffany has marshaled in her petition and her various supplements . . . comes close to satisfying the clear and convincing evidence standard" to reform Clara's will regarding disposition of the stocks. The court stated the "and/end" ambiguity argument was precluded by collateral estoppel. Next, Mark's testimony in the 2007 conservatorship proceedings, where he stated that Clara wanted Tiffany to be supported, had no bearing on Clara's intent when making her will in 2001. The court explained that statements from Sterzer and Kakadelas were irrelevant because neither was involved in drafting the will and their statements failed to address the intent of Clara and Charles in November 2001, when they executed their wills.
The trial court then announced that it was "exercising the discretion that is afforded to courts under Probate Code section 11704 to rule on the petition for entitlement or petition for distribution under [section] 11700 without holding an evidentiary hearing," citing to Estate of Shellenbarger (2008) 169 Cal.App.4th 894, 897.
6. The Court Sanctioned Tiffany and Her Counsel for the Frivolous and Repetitious "end/and" Argument
Also at the January 8, 2020 hearing, the trial court considered argument on Mark's motion for sanctions pursuant to Code of Civil Procedure sections 128.5 and 128.7. The trial court granted the sanctions motion in part. The court found that although the section 11700 petition was weak, it generally did not warrant sanctions, except for Tiffany's repetitious "and/end" mistake argument, which was barred by issue preclusion.
First, the trial court sanctioned Tiffany in the amount of $4,000 under Code of Civil Procedure section 128.5. The trial court stated: "The $4,000 in sanctions I'm imposing against Tiffany are tethered to her repeating in the petition for determine [sic] entitlement the and/end argument that was flatly rejected by my predecessor Judge Stratton in the will contest. It's not just that she repeated this argument in the 11700 petition. She repeated it in the face of multiple admonitions from this court in granting her petition for family allowance and in denying her objections to Mark's waiver of account." The court explained: "[t]he and/end argument was frivolous when it was made in the will contest, and it's even more frivolous when it was made as a lead argument in the [Probate Code section] 11700 petition. [¶] It was barred under the doctrine of res judicata, the collateral estoppel prong, issue preclusion. [¶] I find that Tiffany made this argument in bad faith because she made it in the face of the court's warnings. I can only surmise that she did this not in good faith."
The amount of the sanctions-$4,000-was calculated as the equivalent to one month of Tiffany's family allowance. Mark was ordered to make the remainder of the accumulated family allowance payments, which had been suspended pending adjudication of the section 11700 petition, minus this $4,000.
The trial court then sanctioned Tiffany's counsel $10,000 under Code of Civil Procedure section 128.7 for "repeating the and/end argument." The court explained that the amount represented "a little bit less than one-fifth of the fees that Mark is seeking in his sanctions motion." The court stated that it had warned counsel multiple times that the argument should not be repeated. The court concluded: "[a]s a lawyer," counsel "should have known better," and "should understand the doctrine of res judicata." The court reiterated: "It's a frivolous argument. It was frivolous when [the first trial judge] Judge Stratton rejected it, even more frivolous when you made it."
D. The Court Ordered Final Distribution and Reiterated that Tiffany Is Not Due Any Cash from the Estate
At the January 8, 2020 hearing, Tiffany's counsel argued that Tiffany should receive some of the cash residue from the estate, disagreeing with the trial court's June 2019 ruling granting Mark's waiver of accounting. The following colloquy took place after the court asked Mark's counsel to explain the cash accounting:
"[Mark's Counsel]: There was $212,000 of cash [in the estate]. [$]125 already went to Tiffany. Another [$]90, 000 was expended on statutory fees. We're already-my client's already now paying for all of the administrative expense in this estate.
"[The Court]: In other words, there's no residue.
"[Mark's Counsel]: There's no residue. There's no cash left after all of the court's ordered payments and
"[The Court]: So that's why there's nothing to give Tiffany at this point.
"[Tiffany's Counsel]: If I may, [Y]our [H]onor. [¶] . . . [¶] I don't know what $125,000 she's talking about. All that was removed out of that [$]212 was $66,000 to attorney Peck. Mr. Tonkovich's assignment was withdrawn. Their balance should be at least [$]44, 000 owed to Tiffany.
"[¶] . . . [¶]
"[Mark's Counsel]: Your [H]onor, there was $212,000 of cash. From that $212 in cash, we paid over [$]125 actually to Tiffany based on the court's July 25th, 2019, order.
"[The Court]: The construction order and the family allowance.
"[Mark's Counsel]: Yes.
"[Tiffany's Counsel]: But, [Y]our [H]onor.
"[Mark's Counsel]: It has to be paid from something."
Tiffany's counsel then argued that Judge Beckloff in the conservatorship proceeding ruled that Tiffany's family allowance may not be treated as an advance on her inheritance. The trial court responded: "That was Judge Beckloff's ruling during the conservatorship. The ruling that I made is not continuing Judge Beckloff's ruling about what was appropriate during Clara's conservatorship but what's appropriate in connection with the petition for family allowance [in the present probate proceeding]. [¶] So there's cash, but if the cash is taken up with a family allowance, then there's no cash. There's no other cash. So I don't - so Judge Beckloff may have said what he said, but I don't believe that the provisions in the Probate Code regarding family allowance would suggest that, if there's no cash in a final accounting because there's been payment of a family allowance along the way during estate administration that somehow the executor has to dig out of his own pocket and give cash residue to somebody else."
On January 13, 2020, the court ordered the administration of the estate brought to a close. The court ordered final distribution of the estate property, with Tiffany receiving Clara's remaining interest in the Valley Center property, and Mark receiving the rest of the estate, i.e. the several real estate properties, stocks, and remaining cash, if any.
Apparently Tiffany already owned a partial interest in the Valley Center property where she lived. She and her parents had held title together as joint tenants since 1992.
DISCUSSION
Tiffany argues the court erred in (1) denying her section 11700 petition and sanctioning her for her repetitive argument allegedly barred by res judicata, (2) denying her request for the will inspection, (3) granting Mark's motion to quash, for a protective order, and for sanctions, and (5) approving the waiver of an account. We address each issue in turn.
We address the section 11700 petition first as the court's reason for denying the discovery motions was closely tied to issue preclusion and the testamentary intent at issue in the petition. We observe the issue preclusion subject percolated in the court for a while before the court ruled on it: the court warned Tiffany multiple times not to repeat her "end/and" argument as it had previously been considered and ruled on in the will contest before Judge Stratton.
A. Issue Preclusion Bars Tiffany's "End/And" Ambiguity Argument
In her section 11700 petition, Tiffany sought to reform the portion of the will that distributed Clara's stocks to Mark, arguing that the will contained a mistake and Clara intended the stocks to go to Tiffany. Tiffany brought the petition pursuant to Estate of Duke, supra, 61 Cal.4th at p. 871. Duke held that "an unambiguous will may be reformed to conform to the testator's intent if clear and convincing evidence establishes that the will contains a mistake in the testator's expression of intent at the time the will was drafted, and also establishes the testator's actual specific intent at the time the will was drafted." (Id. at p. 898.)
The court concluded that Tiffany's central "end/and" ambiguity argument was barred by the collateral estoppel (issue preclusion) prong of res judicata.
Tiffany does not appeal the court's conclusion that Tiffany's other arguments for reformation were unconvincing. She merely asserts that there was "further extrinsic evidence" that she was completely dependent on her parents for income. This fact is not disputed and is of no consequence to proving a mistake worthy of will reformation under Duke.
On appeal, Tiffany asserts that the court erred in applying issue preclusion to her argument. We review for abuse of discretion the denial of a will reformation petition brought under Probate Code section 11700. (Wilkin v. Nelson (2020) 45 Cal.App.5th 802, 808.) We review de novo whether issue preclusion bars the petition to determine distribution. (Murphy v. Murphy (2008) 164 Cal.App.4th 376, 399 (Murphy).)
Courts "have frequently used 'res judicata' as an umbrella term encompassing both claim preclusion and issue preclusion, which [have been] described as two separate 'aspects' of an overarching doctrine. [Citations.] Claim preclusion . . . acts to bar claims that were, or should have been, advanced in a previous suit involving the same parties. [Citation.] Issue preclusion, . . . historically called collateral estoppel, describes the bar on relitigating issues that were argued and decided in the first suit. [Citation.]" (DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 823-824 (DKN Holdings).) We follow our Supreme Court in referring "to 'claim preclusion' rather than 'res judicata' [citation], and use 'issue preclusion' in place of 'direct or collateral estoppel' [citations]." (Samara v. Matar (2018) 5 Cal.5th 322, 326 (Samara); see also DKN Holdings, at p. 824.)
Issue preclusion "prevents 'relitigation of previously decided issues,' rather than causes of action as a whole. [Citation.] It applies only '(1) after final adjudication (2) of an identical issue (3) actually litigated and necessarily decided in the first suit and (4) asserted against one who was a party in the first suit or one in privity with that party.' [Citation.]" (Samara, supra, 5 Cal.5th at p. 327.) The" 'fact that different forms of relief are sought in the two lawsuits is irrelevant.'" (Villacres v. ABM Industries. Inc. (2010) 189 Cal.App.4th 562, 576 (Villacres).) "When an issue is properly raised, by the pleadings or otherwise, and submitted for determination, and is determined, the issue is actually litigated," and "[w]hether an issue was' "necessarily decided . . ."' has been interpreted to mean that the issue was not' "entirely unnecessary"' to the judgment in the prior proceeding." (Murphy, supra, 164 Cal.App.4th at p. 400.)
Here, the same parties were involved in the earlier will contest that ended in a final adjudication. The identical issue was raised in both the will contest and the section 11700 petition: whether Charles's use of "end" and Clara's use of "and" in the phrase addressing the stocks created an ambiguity in Clara's intent to distribute the stocks. This was a central argument in the will contest, and the trial court decided that it was meritless: "the alleged ambiguity in [Charles's] will is not an ambiguity; it is plainly a misspelling of the word 'and' as 'end' and nothing more." We conclude all four prongs of issue preclusion were satisfied.
Tiffany argues that the will contest and the section 11700 petition "are two very different proceedings with two different goals." Yet, the proceedings and their objectives do not have to be similar for issue preclusion to apply. (Villacres, supra, 189 Cal.App.4th at p. 576.) In sum, Tiffany was precluded from raising the issue repeatedly after the court made a final ruling on it.
B. No Abuse of Discretion in Awarding Sanctions for the Frivolous "end/and" Argument
The trial court found that Tiffany flouted its warnings not to repeat the "end/and" argument that had already been decided in the will contest. The court sanctioned Tiffany and her counsel for the frivolous argument pursuant to Code of Civil Procedure sections 128.5 and 128.7. Tiffany argues court erred in imposing sanctions. We review the imposition of sanctions for abuse of discretion. (Ponce v. Wells Fargo Bank (2018) 21 Cal.App.5th 253, 261 [standard for Code Civ. Proc., § 128.7]; In re Marriage of Sahafzadeh-Taeb & Taeb (2019) 39 Cal.App.5th 124, 145-46 (Taeb) [standard for Code Civ. Proc., § 128.5].)
1. Sanctions Against Tiffany Personally Pursuant to Code of Civil Procedure Section 128.5
Pursuant to Code of Civil Procedure section 128.5, the trial court sanctioned Tiffany $4,000 to be garnished from her family allowance for repeating the "end/and" argument in her section 11700 petition. Code of Civil Procedure section 128.5 states, "[a] trial court may order a party, the party's attorney, or both, to pay the reasonable expenses, including attorney's fees, incurred by another party as a result of actions or tactics, made in bad faith, that are frivolous or solely intended to cause unnecessary delay." (Code Civ. Proc., § 128.5(a).) "Frivolous" is defined as "totally and completely without merit or for the sole purpose of harassing an opposing party." (Code Civ. Proc., § 128.5(b)(2).) The "bad faith requirement of section 128.5 does not impose a determination of evil motive. The concept of 'harassment' includes vexatious tactics which, although literally authorized by statute or rule, go beyond that which is by any standard appropriate under the circumstances." (Taeb, supra, 39 Cal.App.5th at p. 138.)
Here, the trial court rejected Tiffany's "and/end" argument in denying the will contest. When Tiffany continued to reiterate this argument throughout the proceedings regarding the family allowance, the trial court repeatedly admonished her that it found her arguments in the will contest to be "groundless" and warned her that to repeat them would invite potential sanctions. Tiffany nonetheless ignored the trial court and filed the section 11700 petition reprising her "and/end" argument.
The trial court found that the argument was objectively frivolous and made in bad faith because Tiffany defied court orders to abstain from raising the issue. The record supports the trial court's findings. As explained above, issue preclusion barred the "end/and" argument, making her renewal of it frivolous and dilatory. The bad faith finding is supported by the fact Tiffany persisted in making the argument in the face of the court's admonishments.
Tiffany's central argument about these sanctions is that the trial court erred in finding that the "and/end" argument was foreclosed by the doctrine of collateral estoppel, and therefore her repetition of it was not frivolous.
2. Deducting the Sanctions from Tiffany's Allowance
The court ordered the $4,000 sanction to be garnished from Tiffany's unpaid family allowance. Tiffany argues that this deduction was error, yet she fails to provide legal authority to support her position. Tiffany's cited authority stands for the proposition that the California law deems family allowance payments to be important. Whether family allowance payments are "strictly a creature of statute" and are "favored" does not equate with error for the trial court to impose a surcharge.
In Estate of Silverman, the Court of Appeal rejected a similar contention. (Estate of Silverman (1967) 249 Cal.App.2d 180.) There, the executor of a decedent's estate withheld court-ordered family allowance payments to the decedent's widow pursuant to an attachment levied against the widow in a separate civil action. (Id. at p. 182.) Similar to Tiffany's arguments in the instant case, the widow in Estate of Silverman argued that "[a] widow's allowance is exempt from any levy of attachment or execution," and "[a] widow's allowance is in custodia legis and not attachable." (Ibid.)
The Court of Appeal rejected the widow's argument stating: "The right to a family allowance was nonexistent at common law and is 'entirely statutory.' . . . In providing for such allowance in [the predecessor provision] of the Probate Code, the Legislature gave it a highly favored position in relation to other obligations of the estate, but did not exempt it from attachment or garnishment." (Id. at p. 183.) The court continued, "despite the fact that family allowances are for the sole benefit of the widow and for her maintenance, and that they are favored in the law, it is not difficult to assume a situation in which a widow receiving a family allowance, incurs bills for current necessaries of life and does not pay them. If no part of the family allowance could be attached for such bills, the family allowance would achieve a status of immunity. . . ." (Id. at p. 184.)
Here, Tiffany makes a similar claim of immunity from payment of money out of the "favored" status of a family allowance. We apply the reasoning in Estate of Silverman to hold that for the same reason a family allowance is neither exempt from garnishment or attachment; it is not an abuse of discretion to surcharge the family allowance for payment of sanctions.
3. Sanctions Against Tiffany's Counsel Pursuant to Code of Civil Procedure Section 128.7
The court sanctioned Tiffany's counsel, Patricia Lewis, $10,000 for pursuing the repetitious "end/and" argument, despite repeated warnings from the court to abandon the argument. Code of Civil Procedure section 128.7 states an attorney who signs a pleading is certifying that such pleading "is not being presented primarily for an improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation," and "[t]he claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law." (Code Civ. Proc., § 128.7(b)(1)-(2).) Where these requirements have been violated by an attorney or party, the trial court may "impose an appropriate sanction" upon the attorney and/or party responsible for the violation. (Code Civ. Proc., § 128.7(c).)
Unlike Code of Civil Procedure section 128.5, which requires both a showing of frivolousness and of subjective bad faith, we apply only "an objective standard in making its inquiry concerning the attorney's . . . allegedly sanctionable behavior" under Code of Civil Procedure section 128.7. (Optimal Markets, Inc. v. Salant (2013) 221 Cal.App.4th 912, 921.)
We conclude the trial court did not abuse its discretion in finding the "end/and" argument frivolous and dilatory, and awarding sanctions against counsel for its repetition. Even prior to its repetition, the "end/and" argument was fairly nonsensical. Most obviously, "end" was a misspelling in Charles's will, an error that did not appear in Clara's will. It was unclear how a misspelling in Charles's will would prove a mistake in Clara's, which appeared unequivocal on its face. Following the court's repeated admonition to counsel that the "end/and" argument already had been considered and ruled upon, counsel nonetheless pursued the argument in the section 11700 petition. The record supports the trial court's finding that counsel's decision to pursue the argument was objectively unreasonable and frivolous.
C. No Abuse of Discretion in Denying the Will Inspection by Expert Witness
Tiffany argues the court committed reversible error when it denied her request for a forensic expert to examine Clara's and Charles's wills. We review the decision to exclude this evidence for abuse of discretion, except to the extent it was premised on a conclusion of law, which we review de novo. (Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, 773.)
Tiffany asserts she needed a forensic handwriting expert to "to assist with an expert analysis of the marks, i.e., the apparent period before 'and/end' on each will." The court did not abuse its discretion in denying the request. First, proposed evidence only furthered Tiffany's "and/end" ambiguity argument, which the trial court had rejected on the merits and for reasons of issue preclusion. Second, there was no offer that the expert would testify to any other issue. There was no contention that "end" or "and," or any other part of the will, was forged.
D. No Abuse of Discretion in Granting Motion to Quash and Protective Order
Tiffany asserts the trial court erred by prohibiting her from taking opposing counsel Sterzer's deposition." '[T]he issuance and formulation of protective orders are to a large extent discretionary. . . . Ruling on motions for protective orders will not be disturbed absent an abuse of discretion.'" (Nativi v. Deutsche Bank National Trust Co. (2014) 223 Cal.App.4th 261, 316-317.) California courts have repeatedly held that "[d]epositions of opposing counsel are presumptively improper, severely restricted, and require 'extremely' good cause-a high standard." (Carehouse Convalescent Hospital v. Superior Court (2006) 143 Cal.App.4th 1558, 1562; Spectra-Physics, Inc. v. Super. Ct. (1988) 198 Cal.App.3d 1487, 1493 (Spectra-Physics) ["[T]he practice of taking the deposition of opposing counsel should be severely restricted, and permitted only upon the showing of extremely good cause."].)
The "circumstances under which opposing counsel may be deposed are limited to those where (1) no other means exist to obtain the information than to depose opposing counsel; (2) the information sought is relevant and not privileged; (3) the information is crucial to the preparation of the case." (Spectra-Physics, supra, 198 Cal.App.3d at p. 1496; Estate of Ruchti (1993) 12 Cal.App.4th 1593, 1600-1602 (Ruchti).) It "is not a question of whether or not the information never discovered was important to the preparation of the case" but rather, the "point is clearly that other discovery devices less intrusive to the attorney/client privilege and work product protection, such as interrogatories, would have been appropriate." (Ruchti, supra, 12 Cal.App.4th at p. 1602.)
Here, Sterzer had represented Mark since 2007. After Tiffany filed her will contest in 2018, Mark hired a litigation attorney but continued to employ Sterzer throughout the probate proceedings.
Tiffany stated in the trial court that she needed to depose Sterzer primarily to ask about: (1) statements allegedly made by Sterzer to Tiffany and attorney Kakadelas, from 2004 to 2007, and (2) a durable power of attorney allegedly drafted by Sterzer in 2007. The trial court found that Tiffany failed to rebut the presumption it was improper to depose opposing counsel.
The court's determination is supported by the record. The statements allegedly made by Sterzer to Kakadelas occurred several years after Clara had signed the will. Sterzer did not know Clara at the time her will was executed in 2001. It follows that Sterzer could not provide admissible testimony about Clara's testamentary intent when she executed the will in 2001. Sterzer's assistance in creating Clara's 2007 durable power of attorney was not relevant to Clara's 2001 testamentary intent. The trial court aptly found that "whether or not Sterzer was involved in the creation of a power of attorney six years after Clara's will was executed has nothing to do with claims in that pending [section] 11700 petition nor does it support Tiffany's demand that Sterzer's testimony be taken in connection with that petition." We find no abuse of discretion because Tiffany did not show that Sterzer's testimony would be relevant, let alone "crucial to the preparation of the case." (Spectra-Physics, supra, 198 Cal.App.3d at p. 1496.)
E. No Abuse of Discretion in Imposing Discovery Sanctions
The trial court imposed $10,095.00 in sanctions on Tiffany and her counsel jointly and severally for Tiffany's refusal to rescind the Sterzer deposition notice. Tiffany's refusal prompted Mark to file the motion for protective order and to quash the deposition notice.
Per section 2025.420(h) of the Code of Civil Procedure, "[t]he court shall impose a monetary sanction under Chapter 7 (commencing with section 2023.010) against any party, person, or attorney who unsuccessfully makes or opposes a motion for a protective order, unless it finds that the one subject to the sanction acted with substantial justification or that other circumstances make the imposition of the sanction unjust." (Code Civ. Proc., § 2025.420(h).) The "burden of proving 'substantial justification' . . . is on the losing party claiming that it acted with 'substantial justification.'" (Doe v. United States Swimming, Inc. (2011) 200 Cal.App.4th 1424, 1435.) We review discovery sanctions for abuse of discretion. (Ibid.; Ruchti, supra, 12 Cal.App.4th at p. 1601.)
Here, the trial court found Tiffany failed to show "substantial justification" to depose opposing counsel because Sterzer had no admissible evidence to offer. Tiffany's refusal to withdraw the subpoena and deposition notice forced Mark to incur unnecessary expenses in seeking the protective order and motion to quash. We find no abuse of discretion in imposing discovery sanctions.
F. Remand for Accounting and Distribution
In June 2019, the court granted Mark's petition for waiver of accounting because it concluded that Tiffany's interest in the cash residue was satisfied in full. (See Prob. Code, § 10954 ["the personal representative is not required to file an account if any of the following conditions is satisfied as to each person entitled to distribution from the estate: [¶]. . . [¶] (2) Adequate provision has been made for satisfaction in full of the person's interest."]; see also Estate of Moore (1967) 253 Cal.App.2d 945, 951-952 [an "interested person" no longer entitled to a distribution does not have to waive the accounting].) As we explain below, there appears to be confusion regarding the amount of cash residue that existed in the estate, and therefore we remand for an accounting under the Probate Code.
The initial probate inventory on October 29, 2018 showed Clara had $212,308.91 in cash. On February 6, 2019, when Mark filed a waiver of accounting, he attached an exhibit showing that as of December 31, 2018, "cash assets on hand" amounted to $342,727.24. The principal difference between the October and December accountings was that the latter listed an additional Union Bank account with $139,183.22. Despite the more recent December exhibit showing otherwise, Mark's moving papers asserted that $212,308.91 cash remained in the estate.
Although the existing bank accounts fluctuated in small amounts between October and December, the small fluctuations provided no explanation for the appearance of the new Union Bank account containing $139,183.22.
At the January 8, 2020 oral argument on the issue, the court relied on Mark's counsel's assertion that approximately $212,000 in cash existed in the estate when it determined that Tiffany's share of the residue had already been satisfied. Then, on January 13, 2020, the trial court ordered distribution of the estate, stating the estate had $342,727.24 in cash and ordering all remaining cash to be distributed to Mark. Based on these inconsistences, it is unclear from the record how much cash existed when distribution was ordered. We therefore reverse and remand for an accounting of the cash assets.
Tiffany points out that the estate contained rental properties and stocks, and that years prior, Mark indicated during conservatorship proceedings that Clara's estate would likely generate $250,000 in yearly income. We observe that to the extent the rental properties and stocks (all of which were devised to Mark) generated income, that income would be Mark's. (Prob. Code, § 12002 ["A specific devise carries with it income on the devised property from the date of death, less expenses attributable to the devised property during administration of the estate"].)
Tiffany argues the court was not permitted to approve the accounting before ruling on her section 11700 petition. Given that we are reversing and remanding for a new accounting and the section 11700 petition ruling is complete, we do not further address this issue.
Although Tiffany points out these inconsistencies in her briefing, the focus of her argument is that in denying her a share of the cash, the "trial court withdrew all family allowance and construction fund payments from Tiffany's inheritance." She asserts this was in violation of the order issued for her family allowance in the conservatorship proceeding, which prohibited family allowance payments made by the conservatorship estate from being deducted from Tiffany's inheritance. We believe the trial court should consider this issue in conjunction with the accounting.
DISPOSITION
We reverse and remand for an accounting of the cash assets, and modification of the cash distribution if necessary based on the new accounting. The judgment is affirmed in all other respects. The parties shall bear their own costs on appeal.
WE CONCUR: BAKER, J., MOOR, J.