Opinion
D075031
05-01-2020
GUADALUPE LOPEZ, Plaintiff and Appellant, v. JANICE HALL, Defendant and Respondent.
Contreras Law Firm and Dolores Contreras, Iris Gomez, Andrew R. Stilwell for Plaintiff and Appellant. Pestotnik and Timothy R. Pestotnik, Russell F. Winslow for Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2015-00005991-PR-LA-CTL) APPEAL from a judgment of the Superior Court of San Diego County, Julia C. Kelety, Judge. Reversed and remanded with directions. Contreras Law Firm and Dolores Contreras, Iris Gomez, Andrew R. Stilwell for Plaintiff and Appellant. Pestotnik and Timothy R. Pestotnik, Russell F. Winslow for Defendant and Respondent.
Appellant Guadalupe Lopez appeals from a judgment entered after the trial court sustained without leave to amend defendant and respondent Janice Hall's demurrer to Lopez's amended probate court petition. In her petition, Lopez sought, among other things, a judicial determination that Hall, who was the administrator of the estate of Lopez's deceased spouse (the decedent), had breached fiduciary duties, duties of loyalty, and duties to investigate circumstances relating to a third party's claim to the decedent's estate, which resulted in a previous bench trial and judgment in the third party's favor. Characterizing the third party action as one on a contract to make a will, the trial court ruled Hall had no such duties; that an administrator is neither a necessary nor indispensable party to such an action but a " 'mere officer of the court, holding the estate as a stakeholder' "; and that any failure to defend against the third party claim was not the result of Hall's breach of any such duty, but stemmed from Lopez's own actions.
Lopez contends Hall assumed duties of care by taking an active role in the litigation of the third party creditor claim. Lopez further contends Hall waived any neutrality defense by failing to raise it in the third party proceeding and also by taking positions in litigation on the estate's behalf. According to Lopez, this matter presents an issue of first impression: whether an administrator of an estate can assume a duty to defend an estate against a third party creditor's claim by taking an "active role" in the litigation of that claim.
Reviewing Lopez's complaint de novo, we conclude it states a cause of action for breach of fiduciary duty against Hall based on her alleged failure to adequately defend the third party civil action. Because the trial court erroneously concluded otherwise, we reverse the judgment and instruct the trial court to enter an order overruling the demurrer.
FACTUAL AND PROCEDURAL BACKGROUND
Because this appeal comes to us following a demurrer sustained without leave to amend, we take the facts from Lopez's operative verified amended petition, accepting as true material allegations but not contentions, deductions or conclusions of law, and considering matters that are judicially noticeable. (See Heckart v. A-1 Self Storage, Inc. (2018) 4 Cal.5th 749, 753-754; Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc. (2017) 2 Cal.5th 505, 512.)
Decedent died in March 2013. Lopez is his surviving spouse. Hall, a professional fiduciary, was appointed the administrator of the estate under Probate Code section 8440. After the decedent's death, a third party, H.E, initiated a San Diego Superior Court lawsuit alleging the decedent intended to dispose of his real property assets and $5 million of cash assets to H.E. H.E.'s claims were based on the theory she was a creditor of the estate by virtue of a contractual obligation; her claims relied on a document that she alleged was a valid testamentary transfer document declaring such a disposition, as well as the theory of an oral contract between the decedent and her, entitling her to his estate upon his death. The testamentary transfer document was undated and contained a signature line for a witness that was left blank. It was also poorly written, and contained a number of typographical and grammatical errors. In May 2015, an attorney in a letter opined that the document failed as a testamentary transfer instrument. He invited further questions for additional clarification.
The document reads: "I [decedent's name] of sound mind here to state that upon my death, I leave as a gift to [H.E.] S.S.# [number] my property witch [sic] I reside now at [street address] San Diego, and $5,000,000 Million dollars. For her children [A.] and [R.L.] I leave my Washington Mutual Account # [number] and Account # [number]. If I should outlive [H.E.], everything shell [sic] go to her children mentioned above. [¶] This will stand firm and there will be know [sic] changes to this well [sic]."
H.E.'s case proceeded to a bench trial in July 2016. At the outset, the trial court granted Lopez's motion for nonsuit made on her own behalf as well as on behalf of another defendant, Leon Lopez, leaving Hall as the sole remaining defendant. H.E. did not object to Lopez's dismissal from the case. When Hall testified at trial, she admitted it was her obligation to protect the estate assets against improper and/or reasonably questionable creditor claims. In her answer to the complaint, Hall called on H.E. to prove her claim at trial, taking a proactive as opposed to neutral position with regard to the claim. Hall retained an attorney, Harold Ayer, to defend her with respect to her obligations to the decedent's estate.
Hall in her demurrer stated that Leon Lopez was plaintiff's father.
Lopez alleges that at trial Hall was asked: "Part of your duty as administrator is to determine the validity of a creditor claim, is that correct?" to which Hall responded, "Correct."
The trial court in H.E.'s proceeding issued a ruling expressing concerns about the wills and the defense of the case: "Let's start with the defense of this case, in particular, there does not appear to be largely a defense of the case. I would note that there was no cross-examination of three of the witnesses. As far as I know, the defendants did not participate in any sort of discovery, did not ask for either of the Lopezes to remain as witnesses in this matter, except to take some limited testimony that did not seem to me to be relevant to this breach of contract action, but only relevant to the trust issue, which is important, and for the probate matter, but not at issue in this case." Observing that the decedent's own residence address had a typographical error, the court observed there was no testimony about the decedent's facility with English, the circumstances of the wills' typing or signing, or where the original wills might be located. The court found by a preponderance of the evidence that H.E. had proved her case, that there was an oral agreement documented by a written agreement, and that H.E. was entitled to the value of the property, which was no longer owned by the estate, as well as $5 million. Lopez took nothing from her deceased spouse's estate, and suffered at least $6 million in damages.
In June 2018, Lopez filed a verified amended petition in San Diego probate court seeking judicial determinations of Hall's breach of fiduciary duty (first cause of action), breach of duty of loyalty (second cause of action) and breach of her duty to investigate (third cause of action). The petition sought an order of Hall's removal (fourth cause of action) as well as an "enforcement of liability on bond" claim. Lopez alleged the purported testamentary document was reasonably subject to challenge on its face, and that the decedent's signature was a forgery. In part, Lopez alleged Hall had assumed a duty to defend H.E.'s case by agreeing during trial that part of her duty was to determine the validity of creditor claims.
Hall demurred to the amended petition on grounds it did not state facts sufficient to constitute a cause of action. Pointing out the existence of duty was a question of law, she argued none of Lopez's claims were viable as she owed no duty to defend and represent the estate or Lopez's interests in the underlying action. Hall further argued she did not assume a duty by her positions during the trial. She asked the trial court to take judicial notice of various documents from the underlying litigation, as well as litigation between Lopez and attorney Ayer. In opposition, Lopez argued in part that Hall had assumed a duty to determine the validity of creditor claims, and could not take the position that she owed no duty in that respect. She asked the court to take judicial notice of trial transcript excerpts from the underlying matter.
Granting the parties' requests for judicial notice, the trial court sustained Hall's demurrer without leave to amend. It ruled H.E.'s lawsuit was an action on a contract to make a will that was barred by section 9000 of the Probate Code, unlike a typical creditor's claim against a decedent or estate. Relying on In re Estate of Hoffman (1968) 265 Cal.App.2d 135, it ruled that in such an action, the heirs, devisees and legatees were the necessary parties, and the executor or administrator was not a necessary or indispensable party or claimant, but rather was a " 'mere officer of the court, holding the estate as a stakeholder . . . .' " It ruled the sole indispensable defendant was Lopez, who contended Hall did not adequately defend the claims, but the court found the inadequate defense "was not as a result of any breach of duty by Hall—indeed, Hall had no such duty—but as a direct result of [Lopez's] ill-advised motion to be dismissed from the action." The court sustained the demurrer without leave to amend.
DISCUSSION
I. Standard of Review
In testing the sufficiency of a pleading against a general demurrer, we apply well settled rules. " '[W]e examine the operative complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any legal theory,' " (Mathews v. Becerra (2019) 8 Cal.5th 756, 768), liberally construing the complaint's allegations with a view to attaining substantial justice among the parties. (Heckendorn v. City of San Marino (1986) 42 Cal.3d 481, 486.) We are unconcerned with plaintiff's ability to prove these allegations or possible difficulty in proof. (Concerned Citizens of Costa Mesa, Inc. v. 32nd. Dist. Agricultural Association (1986) 42 Cal.3d 929, 936.) " ' " 'We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed.' [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.] When a demurrer is . . . sustained without leave to amend, we decide whether there is a reasonable possibility that the defect can be cured by amendment . . . . " ' [Citation.] ' "The burden of proving such reasonable possibility is squarely on the plaintiff." ' " (Centinela Freeman Emergency Medical Associates v. Health Net of California, Inc. (2016) 1 Cal.5th 994, 1010; see also Dudek v. Dudek (2019) 34 Cal.App.5th 154, 163-164.) If there is a reasonable possibility that the pleading, liberally construed, can state a cause of action, a demurrer should not be sustained without leave to amend. (Concerned Citizens, at p. 936.)
Our review is de novo. (Centinela Freeman Emergency Medical Associates v. Health Net of California, Inc., supra, 1 Cal.5th at p. 1010.) " ' "[W]e review the trial court's result for error, and not its legal reasoning." ' [Citation.] In other words, if the judgment is correct on any theory, even one not provided by the trial court, we affirm." (Dudek v. Dudek, supra, 34 Cal.App.5th at p. 164 ; Estate of Sapp (2019) 36 Cal.App.5th 86, 104 [" 'If the decision of a lower court is correct on any theory of law applicable to the case, the judgment or order will be affirmed regardless of the correctness of the grounds upon which the lower court reached its conclusion' "].)
II. An Administrator's Duty Generally and with Respect to a Claimant's Action on a
Contract to Make a Will
Under the Probate Code, the title to a decedent's property passes on the decedent's death to the person to whom it is devised in the decedent's last will, or, absent such a devise, to the decedent's heirs as prescribed by intestate succession laws. (Prob. Code, § 7000; see Ludwicki v. Guerin (1961) 57 Cal.2d 127, 131 (Ludwicki); Estate of Trissel (1975) 44 Cal.App.3d 597, 601.) The property is subject to administration by the executor or administrator "except as otherwise provided by law," and also subject to the rights of beneficiaries, creditors and other persons. (Prob. Code, § 7001; Ludwicki, at p. 131 [under former Prob. Code, § 300, now Prob. Code, §§ 7000, 7001]; see Larson v. Duca (1989) 213 Cal.App.3d 324, 330 [former Probate Code section 300 now reflected in Probate Code sections 7000 and 7001].) In litigation, an estate is represented by a "personal representative." (Code Civ. Proc., § 369, subd. (a)(1).) One type of personal representative is an administrator, who is appointed by the court when a decedent dies without a will. (Prob. Code, §§ 58, 8460.)
In a probate matter, an executor or administrator derives his or her power to act from the order of the probate court, which is the guardian of deceased persons' estates. (County of Los Angeles v. Morrison (1940) 15 Cal.2d 368, 371; see Estate of Sapp, supra, 36 Cal.App.5th at p. 102.) "[T]he '[a]dministration of an estate . . . involves ascertaining the nature, extent, and total value of the decedent's property and transferring it to the proper persons, who include creditors and taxing authorities as well as heirs.' " (Estate of Bonanno (2008) 165 Cal.App.4th 7, 17.) " '[T]he executor or administrator occupies a fiduciary relationship in respect to all parties having an interest in the estate including heirs, beneficiaries under the will and creditors [citations] and, as a fiduciary, has the duty towards such parties to protect their legal rights in the estate.' [Citation.] 'The duties of "an executor or administrator in handling an estate . . . are to preserve and protect the estate, to satisfy and discharge all debts and claims and to distribute the residue of the property to those entitled to receive it." ' " (Estate of Sapp, at p. 102; see Estate of Goulet (1995) 10 Cal.4th 1074, 1082 [trustee, like a personal representative, "owes fiduciary duties which require him to defend the trust corpus against unwarranted diminution until it is distributed to the beneficiaries"]; Estate of Bonanno, at pp. 17-18.) In managing the estate, he or she "shall use ordinary care and diligence," which is to be "determined by all the circumstances of the particular estate." (Prob. Code, § 9600, subd. (a).) In this way, the executor or administrator "serves as a neutral stakeholder with a fiduciary obligation"; "[h]is duty centers around the estate and its interests." (Estate of Denman (1979) 94 Cal.App.3d 289, 292.)
When a person sues to enforce an alleged contract by a decedent to leave property to another, the action rests in equity. (See Ludwicki, supra, 57 Cal.2d at p. 130; Brown v. Superior Court in and for Los Angeles County (1949) 34 Cal.2d 559, 565; Bank of California, National Association v. Superior Court of the City and County of San Francisco (1940) 16 Cal.2d 516, 524.) In Bank of California and Ludwicki, the California Supreme Court described such an action under former law: "The probate court cannot . . . take cognizance of the contract, and an equity court cannot compel the making of a will. Hence, there is no specific performance of the contract in the strict sense. But equity gives relief which is the equivalent of specific performance. Though the estate may be probated and the property distributed accordingly, the court will, in an action by the promisee, impose a constructive trust upon any particular property in the hands of the individual distributee. This relief is sometimes called 'quasi specific performance' since it accomplishes the substantial result of enforcement of the contract. [Citations.] [¶] The action in these cases is against the distributee personally, and not against the estate; and it is independent of the will and the probate proceeding. Each distributee is individually held as a constructive trustee solely of the property which came to him, and none is interested in the granting or denial of similar relief as to any other." (Bank of California, at p. 524; see also Ludwicki, at p. 130 [jurisdiction of an action for quasi-specific performance of a contract to make a will "rests in equity and not in probate"]; Goldstein v. Hoffman (1963) 213 Cal.App.2d 803, 811 [" 'In case of a breach [of a contract to make a will] the promisee has several remedies, such as an action at law for damages and equitable relief in the form of "quasi-specific performance." [Citations.] Equity will give relief equivalent to specific performance by impressing a constructive trust upon the property which the decedent has promised to leave to the promisee' "].)
Ludwicki explained this type of action "does not interfere with the proceedings in probate. It does not set forth a claim against the estate, or against the executor, or against his right to possession for the purposes of administration. The action is in effect a suit between a claimant under the contract and claimants under the will or by intestacy as to who is entitled to all or part of the estate, and it does not purport to interfere with the administration by the executor, who, with respect to the proceeding, is in the position of a stakeholder. [Citation.] The executor, however, may properly be made a party defendant . . . for the purpose of restraining him from distributing the property without regard for plaintiff's interests." (Ludwicki, at p. 132.)
Both Bank of California, supra, 16 Cal.2d 516 and Ludwicki, supra, 57 Cal.2d 127 were decided under former law. The Probate Code now permits such actions to be litigated in probate court. (Prob. Code, § 850, subd. (a)(2); see Estate of Hilton (1996) 44 Cal.App.4th 890, 903, fn. 12; Estate of Linnick (1985) 171 Cal.App.3d 752, 760; Heiser v. Superior Court (1979) 88 Cal.App.3d 276, 278; Copley v. Copley (1978) 80 Cal.App.3d 97, 107.) Thus, while such a claim can still be said to be "independent" from probate because it arises from principles of contract and equity, not wills or intestate succession (Bank of California, supra, 16 Cal.2d at p. 524), the probate court can preside over such a contract claim under section 850.
Probate Code section 850, subdivision (a)(2) provides: "The following persons may file a petition requesting that the court make an order under this part: [¶] . . . [¶] The personal representative or any interested person in any of the following cases: [¶] . . . [¶] (B) Where the decedent while living binds himself or herself or his or her personal representative by a contract in writing to convey real property or to transfer personal property upon or after his or her death and the contract is one which can be specifically enforced." (See Stats. 2001, ch. 49 (S.B. 669), § 1 ["Existing law provides for the determination of claims brought to determine ownership of real or personal property claimed by an estate . . . . A court may not grant a petition under these provisions if the court determines that the matter should be determined by a civil action. This bill would revise, recast, and consolidate those provisions [and] would specify that an action brought pursuant to these provisions may include claims, causes of action, or matters that are normally raised in a civil action to the extent that the matters are related factually to the subject matter of the petition"].)
Ludwicki held this kind of action for quasi-specific performance accrues at the promisor's death. (Ludwicki, supra, 57 Cal.2d at pp. 130, 131.) In Ludwicki, the court acknowledged that upon death, property is put in the possession of the executor or administrator and that, in the case of an express trust, legal title of the trustee and equitable title of the beneficiary vest as of the date of death. (Id. at pp. 131-132.) The Ludwicki court extended this rule to quasi-specific performance actions involving a contract to make a will: "The same principle should be applied to a constructive trust based on conduct of the decedent, including failure to perform a promise to make a will. Accordingly, in such a situation a constructive trust in favor of the promisee and against those who take under decedent's will or by intestacy may be imposed immediately after the date of death." (Id. at p. 132; see also Estate of Trissel, supra, 44 Cal.App.3d at pp. 601-602.)
Under this principle, imposition of a constructive trust does not remove the trust estate from the administrator's possession. "It is well[-]settled . . . that where a constructive trust is imposed upon the assets in a decedent's estate arising from an unfulfilled promise of the decedent to make a will in the claimant's favor, the trust res is part of the probate estate and is subject to administration in the estate." (Estate of Turino (1970) 8 Cal.App.3d 642, 646; see also Estate of Trissel, supra, 44 Cal.App.3d at pp. 602-603 [trial court was correct in finding that res in a constructive trust is subject to administration]; In re Majtan's Estate (1965) 237 Cal.App.2d 7, 20 [where a claimant is seeking to impose a constructive trust arising from a decedent's unfulfilled promise to make a will, the trust does not interfere with estate administration and if a petitioner obtains a decree imposing a constructive trust on all property, the administrator proceeds to administer the estate].) "The rationale of these cases is that since the cause of action to impose a constructive trust arising from breach of a promise to will arises only upon the promisor's death, the estate is subject to the possession of the executor or administrator for purpose of administration . . . as in the case of an express trust created by will." (Estate of Turino, at p. 646 [holding under former Probate Code section 300].)
The question in Ludwicki was whether the plaintiff's action on a contract to make a will seeking quasi-specific performance was timely filed within the statute of limitations. (Ludwicki, supra, 57 Cal.2d at pp. 133-134.) The court did not address whether in such an action the executor or administrator owed duties of care or the scope of such duty. However, in Estate of Turino, the court addressed an executor's duty in handling this type of action. There, the plaintiffs sued and established a constructive trust in their favor based on a breach of the decedent's promise to make a will in their favor. (Estate of Turino, supra, 8 Cal.App.3d at p. 645.) The executor later sought an award of extraordinary attorney fees. (Id. at p. 646.) On appeal, plaintiffs argued they were entitled to receive the gross estate free of probate and its expenses. (Ibid.) Relying in part on Ludwicki, the Turino court rejected that argument. It explained that because the constructive trust res was subject to administration, it was subject to properly allowed debts, charges and expenses of administration as well as expenses of the executor in the care, management and settlement of the estate. (Id. at pp. 646-647.)
In Turino, some of the expenses were for costs of litigation incurred during the course of administering the constructive trust action. (Estate of Turino, supra, 8 Cal.App.3d at p. 647.) The Turino court held these expenses were allowable on a showing they were necessary and incurred in good faith, reasoning: "Since it is the statutory obligation of the executor to collect, preserve and protect the assets of the estate until distribution [citations] it is likewise his duty to prosecute and defend such suits with respect to claims in favor of or against the estate with a view of marshaling, protecting or conserving such assets. [Citations.] Accordingly, he is bound to defend in good faith against claims that assets of the estate are trust funds and not a part of the decedent's estate. [Citations.] The expenses of litigation in defending such claims, including reasonable attorney fees, are part of the expenses of administration for which the executor is entitled to allowance, provided such expenditures are necessary and are made in good faith." (Id. at pp. 647-648, citing in part In re Hart's Estate (1959) 51 Cal.2d 819, 826-827.)
In a related context, In re Hart's Estate addressed an administrator's duty to preserve property of an estate claimed to be held in trust. There, a representative of the decedent's husband brought an independent civil action against the administrator in which the husband claimed certain property in the decedent's estate was either his own separate property or community property that had vested in him as the survivor without need for estate administration. (In re Hart's Estate, supra, 51 Cal.2d at p. 822.) The superior court determined the husband was entitled to possession (ibid.) and awarded the administrator costs of administration, which included costs and expenses incurred in defending the civil action. (Id. at p. 823.) On appeal, the California Supreme Court rejected the husband's challenge to that award, pointing to the administrator's duty to preserve the property claimed to be held in trust: "An administratrix is bound to defend against a claim, that part of the property found in the name or in the possession of the decedent did not in fact belong to the estate. . . . 'It may often happen that an executor or other personal representative takes possession of funds which may be proved to be trust funds, without any knowledge that such is the fact. Not knowing the fact, it would be his duty to resist, on behalf of the heirs, legatees, and creditors of the estate, any attempt to deprive it of a part of its assets . . . .' . . . In defending in good faith against claims that the assets are trust funds held for the benefit of the claimants, he is entitled to treat the alleged trust fund as an asset, until judicially determined otherwise. [Citation.] The prohibition against using such funds may mean that there could be no active defense where the best interests of the heirs, legatees and creditors of the estate, would require such a course." (Id. at pp. 826-827.) The court held the lower court properly allowed her expenses in defending the civil action, even though "some items of costs may not be directly attributable to the imposition of the defense against the adverse claim," because they "were all necessary costs of the measures undertaken, at least in part, to protect and preserve the estate, and the administratrix was required by law to undertake such measures." (Id. at p. 827.) Though Hart's Estate's discussion of probate court jurisdiction (id. at pp. 823-824) is now superseded by the statutory expansion of that jurisdiction (see Estate of Hilton, supra, 44 Cal.App.4th at p. 903, fn. 12), its holding as to an administrator's duty is unaffected.
III. Lopez's Complaint States a Cause of Action for Breach of Fiduciary Duty
Applying the foregoing principles, and giving a liberal interpretation to the complaint's allegations as we must (Heckendorn v. City of San Marino, supra, 42 Cal.3d at p. 486), we conclude Lopez has stated a cause of action for Hall's breach of her fiduciary duty to defend the decedent's estate assets against H.E.'s claim. Lopez alleges Hall maintained an obligation to protect the estate's assets and Lopez's interests through discharge of her professional services as the estate's administrator, and she maintained a duty to competently and loyally discharge her role as a professional fiduciary in a manner intended to protect the estate and thereby Lopez's interests as an estate beneficiary. Lopez alleges that during the trial on H.E.'s claim, Hall failed to put on a proper defense for the estate. She further alleges Hall breached her fiduciary obligations to the estate in part by failing to diligently investigate and report information that would have resulted in a lawful challenge by the estate to H.E.'s actions. Lopez alleged that Hall in her capacity as administrator assumed a duty for defense when she agreed during trial that part of her duty was to determine the validity of creditor claims. She alleged that the trial court's ruling in H.E.'s case showed it had no option but to rule in H.E.'s favor, despite its sincere concerns about the quality and extent of evidence presented in the estate's defense.
Lopez alleges this included Hall's failure to: perform discovery, call defense witnesses, recall witnesses for prospective rebuttal testimony, designate experts and call for expert testimony for an opinion about the validity of the testamentary instrument, present evidence of the value of H.E.'s purported services to the estate, call witnesses or put on evidence on the decedent's signature's validity, substantively question or cross-examine witnesses regarding knowledge of consequential facts, substantively cross-examine H.E., argue and/or assert proper affirmative legal defenses such as the statute of frauds or undue influence during litigation and trial, and adequately prepare for trial. Lopez's first three causes of action all sound in breach of fiduciary duty; the fourth cause of action for Hall's removal is likewise premised on the allegation that Hall owed a duty to defend. Thus our conclusion that the complaint states a cause of action for breach of fiduciary duty permits the latter cause of action to proceed.
As Ludwicki makes clear, at the decedent's death, the estate assets passed to Hall to administer. (Ludwicki, supra, 57 Cal.2d at p. 132.) Faced with a civil action seeking to put those assets in trust for a stranger, Hall had a statutory obligation to marshal, protect or conserve those assets until distribution (Estate of Turino, supra, 8 Cal.App.3d at p. 647) and also was bound to defend the action in "good faith against claims that assets of the estate are trust funds and not a part of the decedent's estate." (Ibid.; accord, In re Hart's Estate, supra, 51 Cal.2d at pp. 826-827.) Hall was required by law to protect and preserve the estate. (Hart's Estate, at p. 827.)
Here, the trial court ruled that Hall had no duty to defend H.E.'s contract action seeking to specifically enforce the decedent's writing as a will. The court reasoned: "An action on a contract to make a will, like the one brought by [H.E.] against the Lopezes, is unlike a typical creditor's claim against a decedent or an estate. Indeed, such a claim is actually barred by Probate Code section 9000[, subdivision] (b), which states: 'Claim does not include a dispute regarding title of a decedent to a specific property alleged to be included in the decedent's estate.' Instead, it is an equitable action for quasi-specific performance of the contract alleged to have been made by the decedent. [Citation.] An equitable action for specific performance is not one on a claim or demand against [a] testator's estate." The court further reasoned that while the administrator may be joined as a defendant, she was not a necessary or indispensable party to the lawsuit, but it was the beneficiaries who " 'may seek to intervene and are entitled to defend the litigation.' " The court ruled: "This is because the executor or personal representative is not a 'claimant' but 'a mere officer of the court, holding the estate as a stakeholder . . . .' " The court ruled the inadequate defense of H.E.'s case stemmed from Lopez's "ill-advised motion to be dismissed from the action" not any breach of duty by Hall, who had no such duty.
We need not detail the flaws in the trial court's legal reasoning in sustaining the demurrer without leave to amend, as we review the result, not the rationale. (Accord, Shaeffer v. Califia Farms, LLC (2020) 44 Cal.App.5th 1125, 1145.) It is enough to observe that the court had no basis to reject a duty of care on Hall's part because of her status as a necessary or indispensable party to the litigation. Hall was indeed named as a defendant in H.E.'s action. Ludwicki as well as other cases make clear that Hall was so properly named. (Ludwicki, supra, 57 Cal.2d at p. 132; In re Estate of Hoffman, supra, 265 Cal.App.2d at p. 142.) Beneficiaries are entitled to defend the litigation but not to the exclusion of the executor or administrator. Indeed Probate Code section 9820 "explicitly grants representatives the power to . . . defend 'actions and proceedings against the decedent, the personal representative, or the estate.' " (Estate of Bartsch (2011) 193 Cal.App.4th 885, 895.)
Further, H.E.'s action was not one between heirs or beneficiaries where the administrator is required to remain neutral. (See Adams v. Superior Court (2011) 196 Cal.App.4th 71, 78; Estate of Bartsch, supra, 193 Cal.App.4th at pp. 895-896.) It was an action by a stranger to the estate seeking to place estate assets in trust giving rise to a duty on the administrator's part to protect the estate assets. Labeling Hall a "stakeholder" does not eliminate those fiduciary obligations. (Accord, Estate of Denman, supra, 94 Cal.App.3d at p. 292 [executor or administrator "serves as a neutral stakeholder with a fiduciary obligation"; italics added].) To the extent the court reasoned that beneficiaries must protect their own rights and the administrator has no duty to litigate their claims, the proposition has been superseded by law permitting administrators and executors to participate as a party in an heirship proceeding. (See Estate of Bartsch, at p. 896 & fn. 8 [discussing Probate Code section 11704, subdivision (b) and legislative history].)
The court reasoned in part that H.E.'s action was "barred" by the Probate Code, relying on Probate Code section 9000, subdivision (b)'s delineation of matters that are excluded from the definition of a "claim." Probate Code section 9000 and ensuing sections bear on the requirement imposed on creditors with claims on estates to timely file their claims. (Allen v. Stoddard (2013) 212 Cal.App.4th 807, 813; Wilkison v. Wiederkehr (2002) 101 Cal.App.4th 822, 833-834; see Prob. Code, §§ 9100 [specifying time limits for filing a creditor's claim], 9351 ["An action may not be commenced against a decedent's personal representative on a cause of action against the decedent unless a claim is first filed as provided in this part and the claim is rejected in whole or in part"].) The section defines a "claim" to mean a demand for payment for any of the following, whether due, not due, accrued or not accrued, or contingent, and whether liquidated or unliquidated. [¶] (1) Liability of the decedent, whether arising in contract, tort, or otherwise." (Prob. Code, § 9000, subd. (a)(1).) It further provides: " 'Claim' " does not include a dispute regarding title of a decedent to specific property alleged to be included in the decedent's estate." (Prob. Code, § 9000, subd. (b).)
Here, H.E.'s action sought to enforce an alleged contract to gift her a specifically identified house as well as $5 million, plus specified bank accounts to her children. Assuming the action was a dispute over the decedent's title to specific property and thus not a "claim" (but see Wilkison v. Wiederkehr, supra, 101 Cal.App.4th at p. 835 [claim of breach of an agreement to make a will resulting in loss of a monetary bequest requires legatee to file a creditor's claim, and if unsuccessful, a civil action for damages]), that meant only that H.E. was not a creditor required to file a creditor's claim against the estate within the specified periods of time (see In re Dutard's Estate (1905) 147 Cal. 253, 255-257 [claimants asserting that specifically described property was trust property not belonging to the estate were not creditors required to file a claim even where they asked alternatively for the property's value rather than the property itself]). It did not mean that H.E. was somehow barred from bringing her action against Hall in probate court. As stated above, claims such as H.E.'s now may properly be brought in the probate court (Prob. Code, § 850; see discussion part II, ante) and against an administrator under law superseding prior authorities holding the action is outside the probate court's jurisdiction.
We note H.E.'s action seems to have been a hybrid, asking for both specific property and money, raising a question as to whether she had an adequate remedy at law so as to preclude an equitable action for quasi-specific performance. (See Wilkison v. Wiederkehr, supra, 101 Cal.App.4th at pp. 835-838.) On the issues presented on this demurrer to Lopez's complaint, we need not resolve the point.
In sum, because Lopez's complaint states causes of action for breach of fiduciary duty against Hall and seeks Hall's removal for such a breach, we conclude the trial court erroneously sustained the demurrer. We therefore reverse the judgment.
DISPOSITION
The judgment is reversed and the matter remanded with directions that the trial court enter an order overruling Hall's demurrer. Lopez shall recover her costs on appeal.
O'ROURKE, Acting P. J. WE CONCUR: AARON, J. IRION, J.