Opinion
B287331
06-17-2020
Estate of FERGUSON RHEMM, JR., Deceased. JEFFREY SIEGEL, as Administrator, etc., Petitioner and Respondent, v. TONI ELAINE LEONG, Objector and Appellant.
Toni Elaine Leong, in pro. per., for Objector and Appellant. Westwood Lawyers, Lottie Cohen; Klapach & Klapach and Joseph Scott Klapach for Petitioner and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. BP134303) APPEAL from a judgment of the Superior Court of Los Angeles County, William Barry, Judge. Affirmed as modified. Toni Elaine Leong, in pro. per., for Objector and Appellant. Westwood Lawyers, Lottie Cohen; Klapach & Klapach and Joseph Scott Klapach for Petitioner and Respondent.
Ferguson Rhemm, Jr., died intestate on February 7, 2012. Toni Elaine Leong, one of Rhemm's four children, challenges the probate court's ruling imposing a $64,800 rental surcharge for the 44 months she occupied Rhemm's home after he passed away. Leong contends the surcharge was improper because she had no rental agreement with the administrator and the property was uninhabitable. We affirm but modify the judgment to correct errors in calculation of the surcharge amount.
We use the term surcharge, as used by the court and parties, to refer to the offset applied to Leong's share of her inheritance.
FACTUAL AND PROCEDURAL BACKGROUND
A. Rhemm Dies and Leong Moves into His House
Rhemm had four children: Leong, Eric Rhemm (Eric), Christina Wood, and Teresa Wilson. Shortly before he died on February 7, 2012, Rhemm allowed Eric to live in Rhemm's house (the property) so Eric could care for Rhemm's needs. Eric continued to reside in the property after Rhemm died. Eric passed away four months later, on June 12, 2012. That night, Leong, who had been living in her vehicle parked in the driveway, moved into the house and changed the locks. B. The Petitions and Settlement Agreement
Both Leong and Wood filed petitions seeking to be appointed as the administrator of Rhemm's estate. On November 21, 2014 Leong and Wood entered into a settlement agreement providing for appointment of a third party administrator, Jeffrey Siegel, and for Leong to "reside in the property until ten (10) days after the [c]ourt [o]rder for approval of sale of real property has been issued." Leong also agreed to "allow [the] property [to be] viewed for sale, inspection, repairs, or construction, or visited by the administrator or one of his associates with 48[-]hour notice." On February 6, 2015 the probate court approved the settlement agreement, then on February 9 issued letters of administration appointing Siegel.
On January 11, 2016 the probate court approved Siegel's request to sell the property. On November 3, 2016 Siegel filed a petition for final distribution in which he requested the court surcharge Leong for the rental value of the property and her conversion of Rhemm's vehicle. The petition alleged Leong had moved into the residence on February 7, 2012, when Rhemm died, and stayed there until she vacated the property on March 9, 2016. Siegel submitted a spreadsheet of possible rental values based on estimates from three brokers on comparable properties, reduced by 50 percent because of the "horrible condition" of the property. Siegel averaged the rental estimates to request a surcharge of $71,303. The petition also requested Leong be charged $2,507 for taking and selling Rhemm's 1993 vehicle.
On March 9, 2017 Leong filed an objection to Siegel's petition, in which she argued she did not move into the house until after Rhemm and Eric had died, in June 2012. Further, she argued "[i]n reference to this now-demolished house, the [c]oroner's [r]eport indicated the house was in 'near pack rat condition' and [Leong] had a key to the house but often avoided Eric. . . . Securing the estate was a top priority and was going to require starting eviction proceedings against Eric . . . again." Leong objected to the $71,300 surcharge, arguing the property was "dilapidated" and "not fit to live in." In support of her contention, Leong listed 20 deficiencies in the property, including an inoperable floor furnace; broken staircase light; missing carbon monoxide and smoke alarms; gas leak; substandard back door deadbolt; debris and filth in the garage and back room; broken toilet and kitchen sink; rat infestation in the garage, back room, and above the ceiling; large cuts in the bedroom wall; poor carpeting; heavy dust; black mold around the bathtub; broken drain pipe in the garage; worn-out linoleum; cracked and peeling paint around the house; missing window panes; blackened hardwood floor; and cluttered dining room table. Leong also objected to the $2,507 surcharge for conversion of the vehicle on the basis Rhemm "offered [her] the 4Runner in appreciation for being there for him, and to have a roomier vehicle for [Leong] to sleep in the back with her pet as they traveled to different locations to take nature photographs." C. The Surcharge Trial
Rhemm's granddaughter Colleen Rhemm, licensed real estate broker Michael Tsvilik, Siegel, and Leong testified at the surcharge trial, which was held on August 28 and 29, 2017. According to Colleen, Rhemm lived alone until Eric moved in just before Rhemm's death. Rhemm and Leong were estranged. Leong testified she moved into the house after Eric's death to prevent any family members from stealing Rhemm's car that was parked outside the house, to prevent vagrants from moving into the house, and to maintain the property by cutting the lawn, performing other gardening, and generally taking care of the property. Leong claimed she changed the locks because the keys had been stolen, but she conceded she was the only person who had the new keys.
Although Leong initially testified she did not move in until July 1, 2012, on cross-examination she admitted she changed the locks and "maintained possession of the property" starting on June 13, 2012. On appeal Leong asserts that before her father died, he gave her permission to live in the house. However, there is no evidence in the record to support this contention.
According to Tsvilik, who was hired to sell the property, on 10 occasions he requested Leong allow him access to show the house, but she refused. As a result, Tsvilik was unable to sell the property for its $650,000 value; instead, the property was sold for $480,000 at a probate court auction on January 11, 2016. Further, although the probate court approved the sale on January 11, Leong did not vacate the property until March 9, 2016. Leong also sold Rhemm's vehicle, which had been appraised for $1,350.
Tsvilik also testified as an expert witness as to the fair rental value of the property. When the probate court asked whether the property was "a fixer-upper or a tear-down," Tsvilik responded the property was a "[f]ixer-upper." Tsvilik averaged the rental values provided by three real estate brokers for five comparable properties within one mile of the property to calculate an average fair rental value of $2,400. He then discounted the fair rental value by 50 percent to account for the condition of the property, determining the fair rental value was $1,200 per month. Siegel calculated the total fair rental value of $64,800 by applying the $1,200 monthly rental value to the time period from March 2012 through March 2016, when Leong vacated the premises.
It appears Siegel miscalculated the total rental amount. In his respondent's brief, Siegel notes Leong lived on the property for 44 months, charging Leong only for the full months she was living there. But Siegel's calculation at trial of $64,800 assumes 54 months at $1,200 per month. The correct calculation based on 44 months would be $52,800.
Leong testified as to the condition of the house, "No one could have rented that property as it was. If anything I should have been paid to be security and to maintain the property until it sold." Although the court admitted photographs purporting to show the condition of rooms in the house, Leong did not testify about the photographs or the specific condition of the house. When asked whether anyone told her she could live at the property, Leong responded, "No one told me I could live on the property and no one told me I should not be on the property to preserve the estate." Leong was present when the property was sold on January 11, 2016 at auction, but she testified she did not move out within 10 days because she never received official notice of the sale. D. The Probate Court's Statement of Decision
The condition of the house is not evident from the photographs in the record absent testimony about what the photographs depict.
The probate court issued an oral statement of decision on August 29, 2017. The probate court noted "[t]he sole issues presented . . . are limited to the issues raised in the objections having to do with whether or not there should be a rental offset against Ms. Leong's 1/4 distribution rights and whether there should be an offset for the value of the 1993 Toyota that she appropriated."
The probate court determined any rental usage surcharge would run from June 13, 2012 (when Leong moved in) to March 9, 2016 (when Leong moved out). The court determined a rental usage surcharge was appropriate because "the estate had the right to take possession and manage and handle or dispose of the real property in question, and that didn't happen for a long time." The court found the rental usage value was $1,200 per month and adopted Siegel's calculation of a total rental usage surcharge of $64,800. The court explained, "There was no evidence contradicting the only professional who testified with regard to the valuation process. . . . And the fact that three different entities were used and then Mr. Siegel ran an average number, which was then discounted, I believe 50 percent, that in my mind is a reasonable way to approach what the usage valuation should be."
The probate court made factual findings that Leong was homeless on the day she took possession of the real property, and she changed the locks so "she could control access to and control the house." As a result, "there was no ability to either repair or sell the house so long as she was controlling it under those circumstances."
The probate court acknowledged the house "was not in great condition," but "it was obviously livable because [Leong] lived there for about four years. There were pictures that showed clutter and debris and may show conditions that would make it difficult to live there, but those pictures are undated. . . . It may very well be that the conditions could have been mitigated, and obviously they were mitigated to some extent, because [Leong] lived . . . there four years." The probate court concluded "[c]ommon sense would tell someone that, under those circumstances, you may be called upon to pay for the usage over time." As to Leong's claimed expenses, ". . . they weren't quantified [although they] might properly be expenses that would have been claims against the estate [but] were not made." The probate court found the $1,350 valuation for Rhemm's vehicle was appropriate.
Leong does not challenge the $1,350 surcharge for Rhemm's vehicle.
Siegel served notice of entry of judgment on January 15, 2018. Leong timely appealed.
DISCUSSION
A. Standard of Review
"In reviewing a judgment based upon a statement of decision following a bench trial, we review questions of law de novo. [Citation.] We apply a substantial evidence standard of review to the trial court's findings of fact. [Citation.] Under this deferential standard of review, findings of fact are liberally construed to support the judgment and we consider the evidence in the light most favorable to the prevailing party, drawing all reasonable inferences in support of the findings." (Thompson v. Asimos (2016) 6 Cal.App.5th 970, 981; accord, RSCR Inland, Inc. v. State Dept. of Public Health (2019) 42 Cal.App.5th 122, 131 (RSCR Inland).)
Further, "we do not evaluate the credibility of the witnesses. [Citation.] Rather, 'we defer to the trier of fact on issues of credibility.'" (Estate of O'Connor (2017) 16 Cal.App.5th 159, 163; accord, RSCR Inland, supra, 42 Cal.App.5th at p. 131.) "'A judgment or order of a lower court is presumed to be correct on appeal, and all intendments and presumptions are indulged in favor of its correctness.' [Citation.] Specifically, '[u]nder the doctrine of implied findings, the reviewing court must infer, following a bench trial, that the trial court impliedly made every factual finding necessary to support its decision.'" (Thompson v. Asimos, supra, 6 Cal.App.5th at p. 981; accord, RSCR Inland, at p. 131.)
Although we review the probate court's findings of fact for substantial evidence, we review the probate court's order imposing a surcharge for an abuse of discretion. (Estate of Moore (2015) 240 Cal.App.4th 1101, 1105; Estate of Bonaccorsi (1999) 69 Cal.App.4th 462, 467-468.) B. The Probate Court Did Not Abuse Its Discretion in Imposing a Surcharge for Rent, but the Amount of the Surcharge Is Excessive
"It is the general rule that the amount of an indebtedness of an heir or distributee to the estate may be deducted from his [or her] share." (Estate of Berk (1961) 196 Cal.App.2d 278, 281; accord, Estate of Guiol (1972) 28 Cal.App.3d 818, 827 ["We reach the same conclusion as to the contention that the administratrix' distributive share of the estate should be set off against any indebtedness owed by her to the estate."].) Under this general rule, indebtedness for rent owed may properly be surcharged. (See Estate of Clifford (1936) 16 Cal.App.2d 123, 125 [if legatee were indebted to the estate for rent due while she was in possession of real property, this amount could have been offset against legacy in estate, but claim was barred by statute of limitations].) The party seeking the surcharge has the burden of proof. (Estate of Kirkpatrick (1952) 109 Cal.App.2d 709, 713.)
1. A rental agreement is not necessary to impose a rental usage surcharge
Leong contends the probate court erred in imposing a rental usage surcharge because she did not have a rental agreement with Siegel and she was never placed on notice she would be charged a monthly rental amount for living at the property. Leong's contention lacks merit.
Leong relies on protections in the Civil Code for "persons who hire dwelling units located within this state including tenants, lessees, boarders, lodgers, and others, however denominated." (Civ. Code, § 1940, subd. (a).) However, these protections do not apply to Leong because she did not hire the property. Rather, as the probate court noted, Leong took possession of the property without consent. (See § 1946.2, subd. (i)(2) [tenancy is defined as "the lawful occupation of residential real property and includes a lease or sublease"].)
All undesignated statutory references are to the Civil Code.
Section 1925 defines "hiring" as "a contract by which one gives to another the temporary possession and use of property, other than money, for reward, and the latter agrees to return the same to the former at a future time."
As Leong admitted at trial, "No one told me I could live on the property and no one told me I should not be on the property to preserve the estate." But even if Leong believed she took possession of the property in order to safeguard it, an "heir, although succeeding to the legal title, [is] not entitled to the possession of the property. Until distribution, the right of possession [is] in the administrator." (Estate of Piercy (1914) 168 Cal. 750, 753; accord, Olson v. Toy (1996) 46 Cal.App.4th 818, 825 ["When a person dies, title to his or her property vests in the heirs or devisees, subject to administration."].)
Leong contends she should not be required to pay rent absent notice from Siegel as the administrator. The parties agreed Leong could "reside in the property until ten (10) days after the [c]ourt [o]rder for approval of sale of real property has been issued." Even if we interpret the settlement agreement as providing for Leong to reside on the property rent-free, Leong materially breached the agreement by not allowing the property to be shown to potential buyers and failing to move out within 10 days of the court's order approving the sale of the property. Under these circumstances, Leong cannot rely on the agreement to avoid payment of rent. (Multani v. Knight (2018) 23 Cal.App.5th 837, 851 ["[W]hen one party to a contract breaches a material term of the contract, the other party has the option to terminate the contract for cause."]; see Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821 [one element of a cause of action for breach of contract is "plaintiff's performance or excuse for nonperformance"].) Therefore, the trial court did not abuse its discretion in charging Leong for the reasonable value of her usage of the house. (Estate of Bonaccorsi, supra, 69 Cal.App.4th at p. 472 [substantial evidence supported surcharge on administrator, who was family friend of beneficiary, for reasonable rental value of property where he allowed beneficiary to remain on estate property without paying rent]; see County Nat. Bank etc. Co. v. Sheppard (1955) 136 Cal.App.2d 205, 219 ["It would be unfair and inequitable to the others interested in the estate to allow a beneficiary to receive the fruits of an estate and at the same time to escape the reimbursement of his indebtedness to the estate."].)
Contrary to Leong's argument, the statutory protections requiring three, 30, 60, or 90 days' advance notice to vacate the property are not applicable because they only apply to the hiring of real property, not an agreement to remain in the property without paying rent. (See Code Civ. Proc., § 1161, subd. (2) [three-day notice required where tenant owes back rent]; Civ. Code, §§ 1946 [30-day notice required for termination of month-to-month tenancy], 1946.1 [60-day notice required for termination of tenancy of one year or longer], 1954.535 [90-day notice required for termination of lease of subsidized housing].) Further, because Leong agreed to vacate the property 10 days after the court approved the sale, no additional notice was required.
2. Substantial evidence supports the probate court's determination the property was habitable and a $1,200 monthly rental usage surcharge was appropriate, but the court incorrectly calculated the total surcharge
Leong contends the probate court erred in imposing a surcharge because the property was uninhabitable, relying on the numerous photographs admitted into evidence purporting to show the house was in a state of disrepair and uninhabitable. Alternatively, Leong argues a $1,200 monthly rental amount was excessive given the condition of the property. Neither contention has merit. However, we modify the judgment to correct a calculation error in the total amount of the surcharge.
Leong's reliance on section 1941 is misplaced. That section provides, "The lessor of a building intended for the occupation of human beings must, in the absence of an agreement to the contrary, put it into a condition fit for such occupation, and repair all subsequent dilapidations thereof, which render it untenantable . . . ." (§ 1941.) Section 1941.1 sets forth the conditions that render a leased building uninhabitable. However, as discussed, Siegel did not act as a lessor of the property in allowing Leong to live at the property prior to the sale. Nonetheless, we consider the habitability of the property as relevant to whether a surcharge was appropriate.
Real estate expert Tsvilik testified the property was a "fixer-upper," not a "tear-down." Further, the probate court discounted Leong's photographs purporting to show the property was uninhabitable, explaining the photographs were undated and "[i]t may very well be that the conditions could have been mitigated, and obviously they were mitigated to some extent, because [Leong] lived there four years." Further, although Leong claims her remaining on the property increased its value by protecting the property from harm, the evidence is to the contrary. Leong was contractually required to allow the property to be viewed, and Tsvilik testified Leong's obstruction prevented the property from being sold at the marketed price of $650,000, resulting in a sale at auction for $480,000.
Leong also argues the probate court abused its discretion in determining $1,200 was a reasonable monthly rental amount. However, Tsvilik explained at trial he prepared a chart of five similar properties within a one-mile radius and, after discounting the rental value by 50 percent because of the poor condition of the property, determined the fair rental value was $1,200 a month. Leong did not introduce any evidence challenging the estimate prepared by Tsvilik. On these facts, substantial evidence supports the probate court's findings. (RSCR Inland, supra, 42 Cal.App.5th at p. 131; Thompson v. Asimos, supra, 6 Cal.App.5th at p. 981.)
Although Leong claims on appeal she is entitled to reimbursement for her alleged payment of taxes, insurance, maintenance, security, and other bills, she failed to present testimony at trial about her payment of expenses and did not assert this as a defense in the probate court, forfeiting the issue on appeal. (In re Campbell (2017) 11 Cal.App.5th 742, 756 ["We will not address arguments raised for the first time on appeal."].)
Although the monthly rental amount is supported by the evidence, the probate court miscalculated the surcharge by relying on Siegel's proposed surcharge of $64,800, which incorrectly calculated Leong's possession at 54 months. Based on Seigel's statement in his respondent's brief that Leong lived at the property for 44 months, which is consistent with the probate court's factual findings, the total surcharge should have been $52,800 (44 months at $1,200 per month). In addition, the surcharge did not take into account Leong's entitlement to one-quarter of the estate, which would further reduce the surcharge to $39,600. Accordingly, we order the judgment modified to reflect a $39,600 surcharge. C. There Is No Evidence of Judicial Misconduct
Leong contends the probate court traumatized her by making her sit in the jury box, cutting her off with technical jargon, and acting in a harsh and cruel manner towards her. Leong also contends the probate court allowed the administrator to introduce evidence without first providing her an opportunity to review the documents. However, Leong has failed to cite to any portion of the record showing the probate court engaged in such conduct. Nor did she object to any conduct by the court or admission of evidence, forfeiting any objection. (See Orozco v. WPV San Jose, LLC (2019) 36 Cal.App.5th 375, 397 ["'It is hornbook law that a timely and specific objection is required to prevent the consideration of certain evidence; the failure to object at all waives any claim of error.'"].)
DISPOSITION
The judgment is modified to reduce the surcharge from $64,800 to $39,600. As modified, the judgment is affirmed. Respondent is entitled to recover his costs.
In his respondent's brief, Siegel requests we award him attorneys' fees and costs on appeal. Although an award of costs is appropriate, the proper procedure for recovery of attorneys' fees is for Siegel to file a noticed motion in the probate court. (Lindelli v. Town of San Anselmo (2006) 139 Cal.App.4th 1499, 1517 [amount of attorneys' fees "is a factual issue more properly considered in the first instance by the trial court on remand"].) --------
FEUER, J. We concur:
PERLUSS, P. J.
SEGAL, J.