A153204 A153685 A154546
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Solano County Super. Ct. No. P046395)
David Bentley passed away in January 2014. Appellant Nancy Korff, Bentley's caregiver, claimed entitlement to his estate under a November 2013 holographic will that left the entire $700,000+ estate to her. Respondent Donna Goodrich, Bentley's daughter, filed a will contest. In early 2016, Korff and Goodrich settled the will contest, as memorialized in a written settlement agreement that allocated to Goodrich the estate's cash assets and certain personal property, and to Korff a house, numerous vehicles, and personal property not allocated to Goodrich. Within months of the settlement, Korff received everything due her under the settlement agreement. However, to date—more than five and a half years after Bentley's death—Goodrich has not received the cash assets because Korff suddenly claimed that under the settlement agreement, she was entitled to those assets, leaving Goodrich with nothing more than a print, a portrait, and some costume jewelry. The probate court rejected Korff's attempt to appropriate the entire estate, labeling her interpretation of the settlement agreement "absurd." It also overruled her objection to the appraised value of the house, imposing a $25,252.75 surcharge on her for expenses incurred by the court-appointed administrator as a result of her objection, and declined to rule on her claim to certain refunds received by the estate. Korff appeals that order, as well as two subsequent orders, one ordering her to pay the surcharge and $20,000 in estate expenses by a certain date and granting in part the administrator's request for fees, the other authorizing the administrator to access estate funds to defend against Korff's appeals. We affirm all three orders. We also hold the appeals are frivolous and assess sanctions against Korff and her attorney.
Appeal No. A153204
David Bentley died on January 23, 2014, leaving an estate whose primary assets included a house on Beelard Drive in Vacaville (Beelard Drive house), 12 vehicles, over $387,000 in eight separate financial accounts, and a $17,000 promissory note that was in arrears, for a total estate of just over $700,000. A month after Bentley's death, Nancy Korff, Bentley's caregiver, filed a petition to probate his will—a holographic will he executed two months before his death that named Korff as the sole beneficiary. The next month, Donna Goodrich, Bentley's daughter, filed a will contest and objection to probate of the will, alleging undue influence, duress, fraud, and mistake. Korff denied the allegations and contended the will accurately reflected Bentley's intent to disinherit his daughter.
Because Goodrich also objected to Korff administering Bentley's estate, in August 2014, the probate court appointed respondent Thomas Kiernan as an independent administrator.
As was seemingly insignificant at the time but would become an issue two and a half years later, on October 22, 2014, counsel for Goodrich emailed counsel for Kiernan inquiring about the status of one of Bentley's eight financial accounts. He advised that Goodrich had received a bank statement indicating that a $73,730.55 check was posted to the account, leaving a balance of $2.83, and sought confirmation that Kiernan had withdrawn the funds. Kiernan's attorney confirmed that Kiernan had posted a check on Bank of the West (BOTW) account #7367 in the amount indicated. Korff's attorney also received the emails.
On February 20, 2015, Kiernan prepared a status report that, among other things, reported that the Beelard Drive house was in poor condition, including water damage due to an improperly installed skylight. It was estimated it would cost $35,000 to repair the water damage, replace the roof, and paint the house.
On March 27, Kiernan filed a partial inventory and appraisal (I&A). It listed five of Bentley's eight financial accounts by institution name, account number, and date-of-death balance. Two months later, Kiernan filed a final I&A. The final I&A identified Bentley's three other accounts, including BOTW account #7367, again by institution name, account number, and date-of-death balance. The final I&A also listed the Beelard Drive house, valued at $230,000, and the 12 vehicles. As indicated by the partial and final I&As, which Goodrich and Korff both received, the balance of Bentley's financial accounts on the date of his death was $387,026.92.
He also filed a supplemental I&A that listed only a $250 Dietrich Grunewald print and a $2,250 Eugene Garin painting. This I&A is not germane to the issues before us.
Korff and Goodrich ultimately mediated the will contest, participating in a third mediation session on January 11, 2016 that resulted in a settlement. Present at the mediation was mediator Edward J. Corey, Jr., Goodrich and her attorneys Edward Nevin and Roger Wintle, and Korff and her attorney Joseph Canning. Neither Kiernan nor his attorney Betty Homer was present, although they were available by telephone.
In the hours preceding the settlement, the parties received from attorney Homer an asset inventory prepared by Kiernan. In addition to the Beelard Drive house (with a listed value of $230,000), the 12 vehicles, and miscellaneous household goods, the inventory identified only two bank accounts, neither of which was one of the eight accounts that existed on the date of Bentley's death. Both were BOTW accounts, one a checking account with a balance of $12,235.37 (#1746), the other a money market fund with a balance of $344,018.08 (#4398), for a total of $356,253.45 in cash assets.
This figure was $30,773.46 less than the date-of-death balances listed in the I&As, apparently due to estate expenses paid by Kiernan.
Korff and Goodrich memorialized the settlement in a written "Settlement Agreement and Mutual Release" (settlement agreement) signed by them and their attorneys. Paragraph 2.2, the distributive clause of the settlement agreement, contained three subparagraphs that divided the estate's assets between Korff and Goodrich, as follows:
"2.2.1. TO NANCY:
"i. The Real Property located at 437 Beelard Drive, Vacaville, CA, as more fully set forth in the Inventory and Appraisal dated April 14, 2015, attached hereto as Exhibit A.
"ii. The following vehicles and motorcycles (as further detailed in Exhibit A) as follows:
"a. 2007 Honda Odyssey . . .
"b. 2009 Jeep Wrangler . . .
"c. 2009 Mercury Mariner . . .
"d. 2010 GMC Canyon . . .
"e. 1982 Chevy Custom Deluxe . . .
"f. 1988 Honda Motorcycle . . .
"g. 1986 Yamaha Motorcycle . . .
"h. 1970 Triumph Motorcycle . . .
"i. 1978 Yamaha 400 Motorcycle . . .
"j. 1970 BSA Motorcycle . . .
"k. 1979 Triumph Motorcycle . . .
"l. 1975 Motorcycle Silver Trail Trailer . . . .
"iii. NANCY shall receive all remaining personal property except as provided in Paragraph 2.2.3 below, including miscellaneous household furniture, furnishings, personal effects and the Eugene Guarin [sic] on canvas (size 48 X 24).
"2.2.2. To DONNA:
"i. The following Estate Accounts (as further detailed in Exhibit A):
"a. Travis Credit Union, Prime Share Account . . .
"b. Golden One Credit Union Savings Account . . .
"c. Golden One Credit Union Account, 55 Month Term Certificate . . .
"d. Golden One Credit Union Account, 55 Month Term Certificate . . .
"e. State Farm Bank, Money Market Account . . .
"f. Bank of the West, Checking Account[,] Account Number XXXX7367
"g. U.S. Bank Checking Account . . .
"h. To the extent DONNA wishes to receive it, the Promissory Note, in the original principal amount of $17,000 . . . valued on the Inventory and Appraisal at $16,800.
"The Dreyfus GMNA Account Fund-Class Z . . . shall be distributed to DONNA. To the extent the Dreyfus Account is not listed in Paragraph 2.2.2 and/or included among David's Estate assets, that account shall be distributed to DONNA.
"2.2.3. DONNA to the extent these items are still in existence, shall receive the following:
"i. the Dietrich Grunweld [sic] Print (24 ½ by 24 ¾)
"ii. the adolescent profile photograph of DONNA
"[iii.] certain costume jewelry consisting of: Jade Pendent (on a long gold chain), Butterfly Pin, small women's silver watch with a stretch band. "NANCY makes no representations or warranties as to the whereabouts and/or existence of the above referenced personal property items to be distributed to DONNA."
This subparagraph was erroneously numbered "ii."
Paragraph 2.3 governed the fees for the administration of Bentley's estate, stating that the fees "shall be paid one-half by DONNA and one-half by NANCY, except NANCY's 50% shall not exceed a total of $20,000. Therefore to the extent that the total statutory fees, extraordinary attorneys' fees, and administrator fees exceed $40,000, DONNA shall be responsible for all fees and costs in excess of this amount."
As additionally relevant to these appeals, paragraph 3 was a mutual release of claims, and paragraph 4 was a "Waiver of Unforeseen Claims," in which the parties acknowledged they may later discover claims unknown to them at the time of the settlement, they assumed the risk of such unknown claims, and they waived the benefits of Civil Code section 1542, which provides that a general release does not extend to unknown claims.
It is not clear why only the final I&A was attached. We surmise the omission of the partial and supplemental I&As was an oversight.
On March 30, 2016, two months after the settlement, Korff filed a petition for preliminary distribution, which she verified under penalty of perjury. She stated that the three I&As included all of the assets of the estate and valued the estate at $704,296.92. She sought an order granting her possession of the estate assets distributed to her under the settlement agreement, which she expressly identified as the Beelard Drive house, the vehicles, and "all remaining personal property except as provided in Paragraph 2.2.3 of the settlement agreement and mutual release attached hereto as Exhibit 'A,' which specifically excludes the Dietrich Grunweld [sic] Print (24 ½ x 24 ¾), the adolescent profile photograph of Donna Goodrich, certain costume jewelry consisting of jade pendent, butterfly pin, and women's silver watch." Appended to the petition as Exhibit A was the settlement agreement, which, as noted, attached as its Exhibit A the final I&A. Nowhere in the petition did Korff mention any of Bentley's cash accounts—not the eight original accounts, nor the two BOTW accounts.
In addition to requesting distribution of the assets allocated to her under the settlement agreement, Korff confirmed she would deliver a check for $20,000 to Kiernan under the provision that she pay one-half of the estate expenses up to $20,000. She acknowledged that sufficient liquid assets would remain in the estate to pay all fees, costs, and claims after the requested preliminary distribution.
On April 21, Goodrich filed an objection to the petition, attacking only Korff's interpretation of the cost allocation provision. Noting that the majority of expenses incurred by the estate related to the Beelard Drive house and the vehicles, she argued Korff should bear those costs since she was to receive those assets. According to Goodrich, when the parties agreed to the $20,000 limit on Korff's share of the estate costs, they contemplated only fees necessary for the administration of the estate, such as statutory and extraordinary administrator and attorney fees.
On April 26, Kiernan filed a response to Korff's petition, neither supporting nor opposing her request for a preliminary distribution but seeking to "make the Court aware of certain outstanding issues in adjudicating the Petition." One such issue concerned "the accounts to be distributed to" Goodrich, which issue he explained in a supporting declaration, as follows: "The accounts to be distributed to [Goodrich], as set forth in the parties' Settlement Agreement . . . , do not currently exist, as I consolidated the funds therein into a checking account no. xxx1746 and money market account no. xxxx4398, both held at Bank of the West," with respective balances of $13,497.97 and $344,211.52. He attached an "Account Conversion to Cash Summary," which he described as a "summary of the financial accounts and to whom they are to be distributed according to the Settlement Agreement." Concerning the accounts to go "To Respondent (Donna Goodrich)," the summary listed the eight original accounts, the dates on which Kiernan closed them, and the funds transferred from those accounts to either BOTW account #1746 or #4398.
On June 2, Korff filed a reply arguing that the cost allocation provision applied to all expenses incurred by the estate. More significantly as it relates to her appeals, she did not dispute Kiernan's representation that the settlement agreement allocated the cash accounts to Goodrich. To the contrary, she affirmatively represented that the settlement agreement provided for Goodrich to receive all of the estate's cash assets: "As outlined above, all parties had an updated balance of estate cash accounts at mediation. [Korff's] final substantive offer to [Goodrich] related to estate assets was that [Goodrich] would keep all cash accounts in the estate and some personal property, and [Korff] would receive the real property, vehicles, and remaining personal property otherwise outlined in the Settlement Agreement." Likewise, the concluding paragraph of her reply summarized the essential terms of the settlement: "The four corners of the Settlement Agreement make this simple: 1) [Korff] receives the real property, vehicles, and other personal property items outlined in the agreement; 2) [Goodrich] receives the cash accounts, promissory note, and personal property items outlined in the agreement; 3) [Korff] is to pay $20,000.00 into the estate representing 50% of the fees capped at $40,000.00; and 4) [Goodrich] is to pay all fees and costs in excess of that amount." Like her petition, Korff's reply was verified, making the foregoing statements under penalty of perjury.
Korff's attorney Canning filed a declaration in support of the reply. He confirmed that during the course of the January 11, 2016 mediation session, the parties received from Kiernan's attorney the asset inventory reflecting $356,253.46 in cash assets. Like Korff, he did not dispute Kiernan's representation that the estate's cash assets were allocated to Goodrich under the terms of the settlement agreement, and he made no claim that any cash assets belonged to his client.
On June 7, the court approved Korff's petition for distribution of the Beelard Drive house, the vehicles, and personal property other than the items allocated to Goodrich in paragraph 2.2.3 of the settlement agreement, reserving jurisdiction over the allocation of costs in light of the ongoing dispute. An order authorizing the distribution was entered on June 30.
The dispute surrounding the cost allocation provision came on for hearing on July 12. Attorney Canning maintained the position that Korff's liability for all costs was capped at $20,000. While making this argument, he advised the court, "At this point, the real property and all personal property has been distributed to our client. The only remaining issue for the Court to decide was the payment of the expenses of administration, and we believe that was covered in the settlement agreement." The court ultimately decided the cost issue in Korff's favor, finding that it fell within the mutual release and the Civil Code section 1542 waiver in the settlement agreement and, additionally, that the settlement agreement limited Korff's liability for all expenses incurred by the estate to $20,000. The court also ordered Kiernan to provide an accounting, absent a waiver by both parties. An order to that effect was entered on October 5.
On December 28, Kiernan filed a "First and Final Account and Report of Administrator, and Petition for Approval Thereof and Petition for Final Distribution, Allowance of Compensation to Administrator and Attorneys for Statutory and Extraordinary Services" (petition for final distribution). The petition informed the court that while Goodrich, who was "waiting to receive the entirety of her distribution under the terms of the settlement agreement," waived her right to an accounting, Korff, who had received her distribution "in full," would not, thereby necessitating the accounting.
As to the estate assets, Kiernan's accounting showed that the estate had assets of $370,980.91, comprised of the promissory note and BOTW accounts #1746 and #4398. Kiernan requested statutory and extraordinary fees for him and his attorney in the amount of $62,908.11 and authority to reserve $10,000 for closing expenses and additional liabilities, which amounts he proposed deducting from the assets on hand. This would leave a cash balance of $298,072.80, which he proposed distributing to Goodrich.
On February 21, 2017, Kiernan's petition for final distribution came on for hearing. The court granted his request for statutory compensation for him and his attorney and extraordinary compensation for him. It denied his attorney's request for certain extraordinary fees and continued the request for other extraordinary fees to allow counsel an opportunity to provide additional supporting information. At the hearing, Canning advised that Korff intended to hire separate counsel to review the accounting and that she intended to object to it.
The reporter's transcript for this hearing is not in the record, as Korff did not designate it for inclusion.
On April 14, Korff, now represented by attorney Thomas Tagliarini, filed a verified objection, followed by a verified amended objection, to Kiernan's petition for final distribution. Her primary objection was to the distribution of the funds in BOTW accounts #1746 and #4398 to Goodrich. For the first time—15 months after the settlement—Korff claimed that under the terms of the settlement agreement, she, not Goodrich, was entitled to the funds in those accounts. She asserted that the settlement agreement allocated only the eight original accounts to Goodrich, and since BOTW accounts #1746 and #4398 were not allocated to Goodrich, they were in fact allocated to her under the residuary clause in the settlement agreement.
The amended objection was substantively the same, save for correction of a mathematical error Korff made in her original objection.
In support of this novel theory—a theory, we might add, absolutely contradicted by the representations both Korff and attorney Canning previously made to the court—Korff noted that on the final date of the mediation, the parties received Kiernan's asset inventory that identified the cash assets of the estate, listing only BOTW accounts #1746 and #4398, with respective balances of $12,235.37 and $344,018.08. She further noted that in October 2014—14 months before the mediation—the parties had learned from Kiernan that one of the original eight accounts had been drawn down by $73,730.55 to $2.83 and they thus knew that some of the eight accounts no longer existed. Korff claimed—under penalty of perjury, as the objection was verified—that because she knew at the time of the mediation that at least some of the eight accounts no longer existed but did not know which ones existed or the balance of any of them, she asked the mediator to include a clause in the settlement agreement that she was making "no representations or warranties as to the whereabouts and/or existence of the above referenced personal property items to be distributed" to Goodrich, which clause was then incorporated into paragraph 2.2.3 of the agreement. She further claimed—still under penalty of perjury—she did this because she "wanted to make it clear to Donna Goodrich that no representations were being made concerning the existence or non-existence of the items allocated" to Goodrich. In short, Korff asserted that the settlement agreement allocated to her all personal property not designated for Goodrich in paragraph 2.2.3, and that personal property included BOTW accounts #1746 and #4398.
Korff asserted two additional objections to Kiernan's petition for final distribution. The first was to the appraised value of the Beelard Drive house, valued at $230,000 in the final I&A, on the ground that it did not take into account the deteriorated condition of the property as described in Kiernan's February 20, 2015 report. The second was to the request of Kiernan's attorney for extraordinary fees.
On April 19, Korff's attorney Tagliarini forwarded to Kiernan's attorney a corrected I&A with the value of the Beelard Drive house left blank, requesting that Kiernan sign it and send it to the probate referee for his final determination of the value of the house. Kiernan declined to sign it, believing the probate referee had correctly appraised the house and he, Kiernan, had no duty to sign the incomplete I&A provided by Tagliarini.
On May 18, Goodrich filed a response to Korff's objection to the petition for final distribution, disputing her claim to the two BOTW accounts. According to Goodrich, the parties intended to allocate to her the funds that were in the eight accounts at the time of her father's death, regardless of where those funds were at the time of settlement. She contended it did not matter what accounts were listed on the settlement agreement because all funds from the eight closed accounts could be traced to the two BOTW accounts, and had she known at the time of the settlement that the eight accounts had been closed and the funds transferred to the two BOTW accounts, she would have put those accounts in the settlement agreement since she "would not have negotiated a settlement for accounts that contained nothing . . . ." As to Korff's theory that the residuary clause allocated the two BOTW accounts to her, Goodrich argued the clause encompassed only tangible personal property and did not include the cash accounts. Lastly, Goodrich argued that the sentence in which Korff made no representations about the whereabouts of "the above referenced personal property" related only to the specific personal property items itemized in paragraph 2.2.3(iii), as was evident from the fact that it directly followed that subparagraph without a new paragraph designation.
As to Korff's objection to the appraised value of the Beelard Drive house, Goodrich noted that the appraisal was filed on May 22, 2015 and Korff raised no objection until April 13, 2017, long after the house had been distributed to her. She argued that Korff's request for a hearing on the issue would only serve to increase the expenses for which Goodrich was liable, similar to Korff's bad faith insistence on an accounting, for which Goodrich would again bear the costs. Goodrich thus requested that the court require Korff to pay all expenses associated with her objection and any further hearing on the issue of the property valuation.
As to Korff's third objection—to Kiernan's request for extraordinary fees for his attorney—Goodrich pointed out that Korff had no liability for any further estate expenses. Thus, according to Goodrich, Korff's objection to the fee request was "clearly in bad faith, used as a delay tactic against [Goodrich], and maliciously used to cause financial harm to [Goodrich] who has to bear the cost of additional attorney's fees for her attorneys and for the administrator and more administrator fees."
Kiernan also filed a response to Korff's objection, first taking exception with her suggestion the parties were unaware of the state of the cash assets at the time of the mediation, pointing to the asset inventory provided to the parties the day they reached the settlement. Second, he maintained that his proposed distribution of the cash assets to Goodrich was correct, despite Korff's "baseless Objection [seeking] to wrench the remaining valuable estate assets consisting of two bank accounts" from Goodrich. And while it was "of no moment to [him] what assets and to whom estate assets are to be distributed," he expressed concern that Korff's "protracted litigation" was "depleting estate assets to Goodrich's detriment" since Korff's liability for estate expenses was capped at $20,000 with Goodrich to bear the balance. It was also, he noted, delaying payment to himself and his attorney, neither of whom had been paid since his appointment.
Kiernan also refuted Korff's objection regarding the extraordinary fee request, and he labeled her objection to the $230,000 appraised value of the house "misguided and wrong," identifying the procedural flaws in it, explaining that adjusting the appraised value would affect his "account, which will require him to amend the account and the pending Petition, resulting in further delay and expense to Goodrich, Administrator and his counsel," and accusing Korff of seeking the adjustment to unjustly reduce his and his counsel's statutory compensation. He submitted that enforcement of the Civil Code section 1542 waiver would resolve all objections to the account and proposed final distribution, including Korff's unwarranted request for reappraisal of the Beelard Drive house.
Like Goodrich, Kiernan requested the court impose a surcharge on Korff for his expenses associated with defending his account against her objections, arguing a surcharge was warranted under both Probate Code sections 8906 and 11003 because the objections were made without reasonable cause and in bad faith.
Korff filed a verified reply in which she reiterated her position that the express terms of the settlement agreement allocated eight accounts by institution and account number to Goodrich, while all other personal property, including the two BOTW accounts, were allocated to her. According to Korff, "This is what the Settlement Agreement states, this is what the parties agreed to and this is what the parties understood." She claimed that Goodrich bargained only for whatever remained in the eight accounts, knowing they might contain nothing: "[T]he parties negotiated that Goodrich would receive whatever balance remained in the nine [sic] accounts allocated to Goodrich. It was agreed and the Settlement Agreement specifies (under paragraph 2.2.3) that Goodrich will take the risk of the existence and whereabouts of the personal property allocated to her." Korff complained that Goodrich was attempting "to rewrite the Settlement Agreement" to obtain a "different allocation" only "after later learning the balance" of the eight accounts, an attempt precluded by the Civil Code section 1542 waiver and the parol evidence rule.
Turning to Kiernan's response, Korff alleged that he had breached his duty of impartiality by expressing an opinion about the terms of the settlement agreement, particularly given that he was not present at the mediation. She further complained that he refused to produce copies of bank statements reflecting account balances as of the date of the settlement, impeding her ability to determine if his proposed distribution was correct. Lastly, she contended Kiernan breached his fiduciary duty and demonstrated his bias by refusing her request to sign a corrected I&A and forward it to the probate referee for his completion. Buried in her 14-page reply brief were these two sentences raising a new issue: "[Kiernan's] accounting on page 10 of Receipts Schedule shows deposits of $15,243.84 from various sources outside of the accounts allocated to Goodrich. Pursuant to the expressed terms of the Settlement Agreement, all of those deposits should be allocated to Korff."
On June 1, 2017, Kiernan's petition for final distribution and Korff's objection to it came on for hearing. The first issue addressed was Korff's request for reappraisal of the Beelard Drive house. Attorney Tagliarini argued that the settlement agreement did not contain any valuation of any asset, including the house, and that Korff was the only one affected by correcting the valuation since she would be subject to a higher property tax base if the valuation was not amended. He informed the court that since Kiernan would not sign a corrected I&A with the value of the house left blank, he had communicated directly with the probate referee, who said information regarding the condition of the property would have made a difference in his valuation and had returned to Tagliarini a revised I&A that reduced the valuation of the property by $30,000, which revised I&A Tagliarini wanted to have filed. On questioning by the court, Tagliarini conceded that a lower valuation would reduce the statutory compensation for Kiernan and his counsel.
Counsel for Kiernan observed that "that just seems really bizarre to me because it's the administrator who submits the I&A, and [the probate referee] is randomly signing I&As submitted by anyone to him? This just sounds very bizarre to me." The court agreed, having "never heard of such a thing before."
Following argument on the issue, the court overruled Korff's objection to the value of the Beelard Drive house, finding the parties had relied on the appraised value when they entered into the settlement agreement; Korff failed to object to the valuation at the time of the settlement or when she sought distribution of the house or when the property was distributed to her; and she thus waived any objection to the value in the settlement agreement. The court found her objection to be without reasonable cause and imposed a surcharge on her pursuant to Probate Code section 8906, deferring the amount pending submission by Kiernan of an itemization of the fees and costs he and his attorney incurred in defending the estate against Korff's request for a corrected I&A. The court confirmed the value of the Beelard Drive house at $230,000.
Argument then turned to Korff's claim to the two BOTW accounts. Goodrich's attorney Wintle argued that while the settlement agreement did not set forth the accounts and their amounts, "it was clear that the settlement was based on the value of the liquid assets in the bank accounts, which all went to [Goodrich]. And the value of the house and the vehicles that went to Ms. Korff, that was discussed, that was part of the discussion that resulted in the settlement. [¶] So even though they may not be in there, that was [the] motivation for settling between the two parties." Once all fees and costs were paid, Wintle argued, the balance of the two remaining accounts should be distributed to Goodrich.
Tagliarini countered that the settlement agreement accurately reflected the agreement of the parties, that being that the accounts listed in the settlement agreement were to go to Goodrich in the state they were in at the time of the settlement, with any remaining personal property going to Korff. Wintle described this position as "preposterous," elaborating: "[I]f you take it to its logical conclusion, we were mediating over accounts that had been closed, unbeknownst to us, and the proceeds of those accounts put in the new accounts under the control of the administrator. So if you take that argument to its logical conclusion, my client was arguing for nothing, because we have closed accounts, and so she was arguing to get nothing. [¶] And we did three long, drawn-out mediation sessions that cost a lot of money for attorneys, mediators, et cetera. And it just defies logic to think that that argument has any credibility whatsoever. Those accounts that we thought were identified in the original inventory and appraisal were the accounts that we were arguing about, because we were arguing about funds, and we were arguing about percentages to be received by each party as part of the settlement."
Tagliarini disagreed, contending that while "money is fungible, . . . accounts are not," and as such the accounts listed in the settlement agreement were the assets allocated to Goodrich. He also argued that the Civil Code section 1542 waiver defeated Goodrich's position: "Both parties took the risk of later-discovered facts having an effect, but said, 'We understand that risk, and we accept it, and we acknowledge it.' What we hear now, from Mr. Wintle, is that, you know, 'Had we known that the accounts had zero balances, we would not have made that agreement.' But that is exactly what a [section] 1542 waiver and the parol evidence rule is designed to circumvent, just this kind of thing. Both parties took the risk."
Following argument, the court continued the matter to July 26, ordering Kiernan to provide supplemental information regarding the estate's bank accounts.
On July 14, Goodrich filed a supplemental response to Korff's objection to the final distribution. She first argued that the settlement agreement was not ambiguous and parol evidence was not needed to determine the agreement of the parties. It was clear from the settlement agreement, she submitted, that the estate assets were divided by physical assets and financial assets, with Korff receiving the former and she the latter. She disputed Korff's assertion that she, Goodrich, was aware that at least one, if not all, of the original eight accounts was closed simply because Kiernan's attorney sent an email in 2014 regarding a check posted to one of the original eight accounts. Rather, she submitted, it was obvious at the mediation that she was not aware the eight accounts had a zero balance, and only Korff's "twisted logic" would allow one to conclude she was negotiating for closed accounts. Alternatively, she argued that if the settlement agreement was ambiguous, parol evidence would demonstrate that the parties intended to allocate the cash assets to her.
Goodrich also argued that if Korff was to be believed, she knew the eight accounts listed in the settlement agreement were closed yet entered into the agreement without bringing that fact to Goodrich's attention so that she, Korff, would get the entire estate and Goodrich nothing, despite that that was not her expressed intent during the mediation. This, Goodrich submitted, was classic fraudulent inducement, and she urged the court to reject Korff's attempt to perpetrate a fraud.
Finally, Goodrich requested that the court impose a $4,876 surcharge on Korff for the attorney fees and costs Goodrich had incurred as a result of Korff's unreasonable, "frivolous," and bad faith attempt to change the allocation the parties agreed on at the mediation.
On July 17, Kiernan filed supplemental information as directed by the court at the June 1 hearing. It included a summary of fees he and his counsel incurred as a result of Korff's request for a corrected I&A, totaling $25,252.75; additional details supporting his and his counsel's request for extraordinary fees; and a tracing of the funds transferred from Bentley's eight original bank accounts to the two BOTW accounts.
On August 8, Korff filed a reply to Goodrich's supplemental response. She disputed that she had engaged in fraud or deceit, claiming these were merely "desperate" allegations from Goodrich, who was seeking to evade the agreement the parties made and modify it into something "completely and materially different from what the parties agreed to."
As to the Beelard Drive house appraisal, Korff contended it was improper to impose a surcharge on her because Kiernan owed her an obligation to provide accurate information to the probate referee in order to obtain an accurate appraisal, and she was "clearly within her rights under the settlement agreement to request such a correction" and "also within her statutory right to object to the appraisal under Probate Code [section] 8906."
Finally, Korff claimed she was "obliged" to file objections to Kiernan's accounting and proposed distribution because he "provided no information to enable [her] to evaluate whether the amount he proposed to distribute to Goodrich came from the accounts allocated for Goodrich to receive." In passing, Korff again asserted that refunds to the estate totaling $15,243.64 should have been distributed to her under the residuary clause, an assertion that comprised a mere two sentences in her eight-page brief.
In support of her reply, Korff submitted a declaration in which she testified under penalty of perjury in pertinent part as follows:
"4. I agreed to settle the litigation based upon the assets that are allocated to me in the Settlement Agreement. The assets I was designated to receive included, but were not limited to the assets listed in paragraphs 2.1 and 2.2.1 of the Settlement Agreement. Those assets included financial accounts. Therefore, it is not true that the parties agreed that I receive only tangible property and Goodrich to receive all financial accounts.
"5. Under paragraph 2.2.1(iii) I was designated to receive any and all personal property with the exception of the assets and accounts listed for Goodrich to receive as set forth under paragraph 2.2.2. The list of accounts allocated to Goodrich did not include the two Bank of the West accounts #1746 and #4398. The existence of those accounts and the amounts they contained were provided by Betty Homer [counsel for Kiernan] to me and my attorney just as they were provided to Goodrich and her attorneys prior to the time we entered into the Settlement Agreement.
"6. The fact that the two Bank of the West accounts (#1746 and #4398) were allocated to me under the Settlement Agreement was material to my decision to enter into the Settlement Agreement.
"7. One of the eight listed accounts for Donna Goodrich to receive was Bank of the West account #: XXX7367. On October 22, 2014, counsel for Goodrich sent an email to Betty Homer, counsel for the Administrator, Thomas Kiernan, inquiring about a check in the amount of $73,730.55 written against Bank of the West account #: XXXX7367 leaving a balance in that account of $2.83. In reply, Mr. Kiernan confirmed with Ms. Homer that he had written the subject check. Mr. Kiernan's email acknowledged that he had all but closed Bank of the West account #: XXXX7367. That email was forwarded by counsel for Mr. Kiernan to counsel for Goodrich and also to my attorney, Joseph Canning. Therefore, at the time of the mediation, on January 11, 2016, both Ms. Goodrich and I and also our attorneys were aware of the fact that Bank of the West account #: XXXX7367 had a near zero balance.
"8. Under paragraph 2.2.2 [of] the Settlement Agreement Bank of the West account #: XXXX7367 is allocated to Ms. Goodrich. Recognizing that account had a near zero balance and to make sure there was no misunderstanding, I asked the mediator, Edward J. Corey, Jr., to include a caveat in the Settlement Agreement to make sure it was clear that I was not making any representations or warranties about the whereabouts or existence of any of the assets that Donna Goodrich was designated to receive. At my request, Mr. Corey drafted the caveat. It was Mr. Corey who decided to place the caveat into the Settlement Agreement as a non-indented paragraph at the end of paragraph 2.2.3."
In an August 11 sur-reply, Kiernan took exception with Korff's claim that he had wrongfully withheld estate records, representing that he had plainly disclosed all estate accounts in his first and final account and in the documentation supporting his July 17, 2017 filing.
At a November 15 hearing, the probate court issued multiple rulings, first overruling Korff's objection to distribution of the cash assets to Goodrich. It provided the following analysis:
"With regard to the distribution of the Bank of the West accounts, Schedule F of the accounting shows that the estate has three assets: A Bank of the West checking account ending in 1746 with a value of $9,590.35, a Bank of the West money market account ending 4398, with a value of $344,590.56, and a promissory note valued at $16,800.
"While the proposed distribution distributes, quote, cash to Goodrich instead of specific account numbers, it is clear to the Court that Mr. Kiernan can only distribute what is in his possession.
"Thus, the distribution to Ms. Goodrich of, quote, cash is actually a distribution of the balance remaining in these two accounts once these fees and costs are paid.
"Accordingly, the Court finds that Ms. Korff's objection to the lack of detail on what exactly is being distributed lacks merit.
"The Court understands the settlement agreements are contracts and that legal principles that apply to contracts apply to settlement agreements.
"The settlement agreement has been filed with the Court, and the settlement agreement overall is clear and explicit.
"Specific accounts are assigned to Ms. Goodrich. Those accounts are admittedly no longer in existence. Mr. Kiernan and Ms. Goodrich both stated the accounts were closed and the funds moved into two accounts that are not explicitly addressed in the settlement.
"Ms. Korff and Ms. Goodrich both use this set of facts to argue that they are entitled to the two accounts at issue. A settlement agreement, quote, must be interpreted to give effect to the mutual intent of the parties as it existed at the time insofar as that intent can be ascertained and is lawful, close quote.
"Determination of this, quote, mutual intent, close quote, is to be based on the language of the agreement alone, provided the agreement's language is clear, explicit, and does not involve an absurdity.
"This is a holding of Leeman v. Adams Extract & Spice, LLC, 236 Cal.App.4th, specifically at pages 1373 through 1374.
"Here the language is clear and explicit that Ms. Goodrich was to receive specific accounts. It would be absurd to believe that the parties agreed to allocate Goodrich empty closed accounts.
"In light of the entire agreement, the settlement agreement is properly interpreted as giving Ms. Goodrich the funds in these accounts that existed at the time of decedent's death or Kiernan's appointment as administrator.
"If those accounts were later closed by the administrator and moved to existing accounts, and if those funds can be traced in[to] the existing accounts, then the proposed distribution is consistent with the settlement agreement.
"The Court finds that Mr. Kiernan has provided the Court with information that is sufficient to prove the tracing of those funds.
"Accordingly, the objection with regard to the distribution of funds to Ms. Goodrich is overruled."
The court went on to again overrule Korff's objection to the appraisal of the house, finding that it "lack[ed] merit." It pointed out that the settlement agreement specifically incorporated Kiernan's I&As, which valued the property at $230,000. And it found that the issue was encompassed by the mutual release and Civil Code section 1542 waiver contained in paragraphs 3 and 4 of the settlement agreement.
Further as to the Beelard Drive house valuation, the court found that Korff's objection to its appraised value "were not done in good faith and were not supported by good cause." It specifically pointed to the facts that the appraisal was done in 2015, that value was relied upon in the January 2016 settlement, and Korff sought distribution of the house in March 2016 and received distribution of it in June 2016 without raising any issue with regard to the valuation. Accordingly, pursuant to Probate Code section 8906, the court imposed a surcharge on Korff of $25,252.75 for fees Kiernan and his counsel incurred in defending against her objection.
The court declined to find that Korff's objection to the accounting was made in bad faith or without reasonable cause.
The court declined to rule on the tax refund issue on the ground that "is not properly before the court and no other parties were aware of the request." The court indicated it would "reserve on this request," but Korff never again raised the issue.
The court took under submission Kiernan's request for extraordinary fees for himself and his attorney, ordering an updated accounting of the fees requested. It continued the matter to December 19, for a status update on the outstanding issues, including Kiernan's extraordinary fee request and Korff's payment of the surcharge and the $20,000 in estate expenses she owed under the settlement agreement.
On December 18, Korff appealed the November 15 rulings (No. A153204). The following day, the court entered a written order on its November 15 rulings, and notice of entry of the order was filed on December 22.
Appeal No. A153685
At the continued hearing on December 19, attorney Tagliarini objected to the court ruling on the outstanding issues because Korff had filed a notice of appeal the previous day, which, he believed, stayed the proceeding. After discussion regarding the effect of the appeal, the court continued the hearing so the parties could analyze the issue.
On January 12, 2018, Kiernan filed a brief addressing the effect of the appeal on his fee request. He argued that pursuant to Code of Civil Procedure section 916, the court was authorized to rule on his request because it was not embraced by the order Korff had appealed. Additionally, he argued the matter was not stayed because Korff had not posted a bond or undertaking as required by Probate Code section 1310 and Code of Civil Procedure section 917.1.
In a January 16 response, Korff contended her appeal did in fact embrace Kiernan's request for fees because the value of the estate, which would be impacted by reappraisal of the Beelard Drive house, would dictate the amount of fees to which Kiernan and his attorney were entitled. Additionally, distribution of the two BOTW accounts was embraced by the appeal, so any distribution from those accounts was stayed.
The matter came on for hearing on January 18. After confirming Korff had not posted a bond or undertaking, and after analyzing Probate Code sections 1300 and 1310 and Code of Civil Procedure sections 917.9, the court ruled that the surcharge order was not stayed, while its "order with regard to distribution is stayed; its order with regard to the reappraisal of Beelard drive is stayed; the denial of surcharge for accounting objection is stayed." The court ordered that Korff pay the $25,252.75 surcharge and $20,000 in estate expenses by February 20.
Lastly, as to Korff's argument that the court should not order statutory and extraordinary fees until the appeal is concluded because the issues on appeal would affect the amount of fees being ordered, the court decided otherwise, awarding 75 percent of the fees requested, with the remaining 25 percent reserved pending the outcome of Korff's appeal.
On February 9, Korff appealed the court's January 18 order (No. A153685), and on February 21, she posted an undertaking in the amount of $67,879.13.
Appeal No. A154546
On May 29, Kiernan notified Korff and Goodrich that he would be moving ex parte the following day for authorization to access estate funds to pay attorney fees he expected to incur in defending against Korff's two appeals. His ex parte application came on for hearing the following day. At the hearing, Tagliarini objected on multiple grounds, one being that the court lacked jurisdiction because Korff's two appeals and her posting of a bond stayed the proceeding. The court granted Kiernan's request, entering an order to that effect the following day, June 1, and Korff appealed the order a week later (No. A154546).
On July 6, we consolidated Korff's three appeals.
On July 26, Kiernan filed a petition for an order confirming the June 1 order, allowing him to access estate funds to defend against Korff's appeals and to administer the estate pending the appeals. The petition was based on Probate Code section 1310, subdivision (b), which authorizes the probate court to "direct the exercise of the powers of the fiduciary" to "prevent injury or loss to a person or property" notwithstanding an appeal.
Korff opposed the petition, objecting that because she had posted a bond "all matters on appeal" were stayed pursuant to Probate Code section 1310, subdivision (e)(1). She also contended that the funds to pay Kiernan's attorney fees were to come from the estate such that section 1310, subdivision (e)(2) compelled a stay.
In a reply, Kiernan pointed out that Korff failed to address Probate Code section 1310, subvision (b), which, as he argued in his petition, authorized the court to permit him to access estate funds to defend the estate and to administer the estate pending the appeals.
At an October 4 hearing, the court granted Kiernan's petition in part, confirming that he could access estate funds to defend against Korff's appeals but denying use of estate funds for the payment of his fees for administering the estate, which fees were "to be held in abeyance" pending the appeals.
1. The Probate Court Correctly Found That the Settlement Agreement Allocated the Funds in the Two BOTW Accounts to Goodrich
Korff's first argument challenges the probate court's finding that the settlement agreement allocated to Goodrich the funds that existed in Bentley's eight financial accounts at the time of his death. As a fundamental matter, she contends the Civil Code section 1542 waiver in the settlement agreement precluded Goodrich from asserting a claim to the two BOTW accounts because she was attempting to "nullify," "reform," "renegotiate," and "rewrite" the settlement agreement "based upon subsequently discovered facts." It was, of course, Korff who initiated the dispute, and one could argue the section 1542 waiver precluded her objection to Kiernan's proposed distribution. Beyond that, Goodrich was not seeking to amend the settlement agreement or assert a previously unknown claim, but rather to enforce the settlement agreement consistent with its language and the intent of the parties. The section 1542 waiver (as well as the mutual release) specifically excepted claims related to "obligations set forth in this Agreement." Her position was thus not barred by the waiver.
Turning to the substance of Korff's claim, a settlement agreement is a contract and is thus subject to the principles of contract interpretation. (Estate of Thottam (2008) 165 Cal.App.4th 1331, 1340; Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 810-811.) The court in Horath v. Hess (2014) 225 Cal.App.4th 456 provided this summary of the principles that guide our analysis here:
" 'When considering a question of contractual interpretation, we apply the following rules. "A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful." [Citation.] "The language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity." [Citation.] "When a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible . . . ." ' [Citation.] 'The mutual intention to which the courts give effect is determined by objective manifestations of the parties' intent, including the words used in the agreement, as well as extrinsic evidence of such objective matters as the surrounding circumstances under which the parties negotiated or entered into the contract; the object, nature and subject matter of the contract; and the subsequent conduct of the parties.' [Citation.]
" 'When a dispute arises over the meaning of contract language, the first question to be decided is whether the language is "reasonably susceptible" to the interpretation urged by the party. If it is not, the case is over. [Citation.] If the court decides the language is reasonably susceptible to the interpretation urged, the court moves to the second question: what did the parties intend the language to mean? [Citation.] [¶] Whether the contract is reasonably susceptible to a party's interpretation can be determined from the language of the contract itself [citation] or from extrinsic evidence of the parties' intent [citation].' [Citation.] If a contract is susceptible to two different reasonable interpretations, the contract is ambiguous. [Citation.] A court must then construe that ambiguous contract language 'by applying the standard rules of interpretation in order to give effect to the mutual intention of the parties [citation].' [Citation.]
"On appeal, a 'trial court's ruling on the threshold determination of "ambiguity" (i.e., whether the proffered evidence is relevant to prove a meaning to which the language is reasonably susceptible) is a question of law, not of fact. [Citation.] Thus[,] the threshold determination of ambiguity is subject to independent review.' [Citation.] If the contract language is determined to be ambiguous and conflicting extrinsic evidence was admitted on the meaning of that language, 'any reasonable construction will be upheld as long as it is supported by substantial evidence.' [Citation.] If, however, no extrinsic evidence was admitted or the extrinsic evidence is not conflicting, the construction of the ambiguous contract language is a question of law subject to our independent construction. [Citation.]" (Horath v. Hess, supra, 225 Cal.App.4th at pp. 463-464; accord, Southern Cal. Edison Co. v. Superior Court (1995) 37 Cal.App.4th 839, 847-848; Winet v. Price (1992) 4 Cal.App.4th 1159, 1165.)
Applying this framework here, we conclude the settlement agreement is unambiguous because it is reasonably susceptible to only one interpretation—that the parties intended the estate's cash assets, regardless of where they resided at the time of the settlement, to go to Goodrich. (See, e.g., Horath v. Hess, supra, 225 Cal.App.4th at p. 465 [stipulation not ambiguous because it was susceptible to only one reasonable interpretation]; Southern Cal. Edison Co. v. Superior Court, supra, 37 Cal.App.4th at p. 848 ["the contract language itself and the conduct of the parties demonstrate the contract could reasonably be interpreted" in only one way].)
First, and perhaps foremost, Korff's interpretation is manifestly unreasonable on its face. (See Vandenbergh v. Davis (1961) 190 Cal.App.2d 694, 697 [affirming trial court's finding that lessee's interpretation of lease provision, which appeared clear, was unreasonable and did not control].) As she would have it, paragraph 2.2.2 specifically allocates only Bentley's original eight accounts, by institution name and account number, to Goodrich; because the settlement agreement does not allocate her the BOTW accounts, and otherwise makes no mention of them, those two accounts belong to Korff under the residuary clause. This literal interpretation of paragraph 2.2.2 completely ignores a fundamental principle of contract interpretation: the language of a contract that appears clear and explicit does not govern its interpretation if it leads to an absurd result. (Civ. Code, § 1638; Shaw v. Regents of University of California (1997) 58 Cal.App.4th 44, 53; Bennett v. Potter (1919) 180 Cal. 736, 740.) As the probate court found, Korff's position is indeed absurd. She asks us to believe that after three mediation sessions—described by Goodrich's attorney as "long, drawn-out mediation sessions that cost a lot of money for attorneys, mediators"—the parties agreed Goodrich would receive only a long past due promissory note and whatever remained in the original eight accounts that she purportedly knew might no longer exist, and she would additionally be responsible for half of the first $40,000 in estate costs and all costs beyond that, while Korff on the other hand would receive the Beelard Drive house, the 12 vehicles, all other tangible personal property save a print, a portrait, and costume jewelry, and the cash accounts valued at over $350,000. In other words, Korff would receive virtually the entire estate, while Goodrich would essentially receive nothing other than a few tangible items and would be liable for tens of thousands of dollars in costs. This interpretation is nothing short of preposterous.
Beyond the pure absurdity of Korff's position, the language of the settlement agreement itself, taken as a whole (Civ. Code, § 1641), demonstrates the agreement is not reasonably susceptible to her interpretation. The settlement agreement allocated to Goodrich the "Estate Accounts" "as further detailed in Exhibit A." Exhibit A was the final I&A, which listed three of Bentley's eight original accounts by institution, account number, and date-of-death balance. Since the institution and account numbers were already detailed in the settlement agreement, the only information added by the final I&A was the date-of-death balances. BOTW account #7367, the account Kiernan had depleted in October 2014, was shown to have a balance of $75,786.50. These facts are consistent with the parties' focus on the funds themselves, regardless of where those funds resided at the time of the settlement.
Further, the settlement agreement is most reasonably understood to divide the estate into the cash assets, to go to Goodrich, and the tangible assets, to go to Korff. Korff argues it is incorrect that the settlement agreement did not allocate her any financial assets, citing paragraph 2.1, which she claims allocated her four financial accounts. She is wrong, as paragraph 2.1 was not a distributive provision. As stated in the settlement agreement, prior to Bentley's death, there were certain inter vivos transfers to Korff, the validity of which Goodrich disputed. Paragraph 2.1 merely "confirmed" those inter vivos transfers to Korff.
Additionally, the residuary clause—which is the crux of Korff's claim to the BOTW accounts—cannot reasonably be read to include the estate's cash assets for at least four reasons. First, such an interpretation asks us to believe that although the parties intended the two BOTW accounts—which contained over $350,000 at the time of settlement—to go to Korff, they intentionally failed to expressly detail this allocation, this despite that they did detail the eight empty bank accounts and the 12 vehicles that were collectively valued at approximately $66,000, or roughly one-fifth the value of the BOTW accounts. It is nonsensical to think that lower-value items, such as a $1,000 motorcycle trailer, were specified in the settlement agreement, but a hotly-contested asset worth approximately half of the estate was merely lumped into the residuary clause's "personal property" category.
Second, it is clear that as used in the residuary clause, the parties intended the phrase "personal property" to refer to tangible assets. The clause allocated to Korff "all remaining personal property except as provided in Paragraph 2.2.3 below, including miscellaneous household furniture, furnishings, personal effects and the Eugene Guarin [sic] on canvas (size 48 X 24)." "Under the principle of ejusdem generis (literally, 'of the same kind') [citations], where specific words follow general words in a contract, 'the general words are construed to embrace only things similar in nature to those enumerated by the specific words.' " (Nygard, Inc. v. Uusi-Kerttula (2008) 159 Cal.App.4th 1027, 1045.) This principle applies here: the general term "personal property" is restricted to tangible personal property by the specific examples of tangible personal property listed thereafter.
Third, contrary to Korff's claim, the residuary clause did not allocate to her all personal property "except for those items that were designated for" Goodrich. The clause was, in fact, more restrictive, providing that Korff "shall receive all remaining personal property except as provided in Paragraph 2.2.3, below," which paragraph in turn allocated to Goodrich a print, a photograph, and certain costume jewelry. The fact that paragraph 2.2.3 listed only tangible personal property further confirms that the parties intended the residuary clause to apply only to tangible personal property.
Fourth, construing the residuary clause as including financial accounts would create an internal conflict in the settlement agreement. Because the only property exempt from the residuary clause were the few items of tangible personal property allocated to Goodrich, construing "personal property" to include financial accounts would allocate to Korff not only the two BOTW accounts but also all other financial accounts—including the eight accounts allocated to Goodrich in paragraph 2.2.2. In other words, paragraph 2.2.2 would allocate the eight accounts to Goodrich, while paragraph 2.2.1(iii) would grant them to Korff.
Despite the myriad flaws in Korff's residuary clause theory—none of which she addresses in her briefing—Korff persists with her interpretation of the settlement agreement, seeking additional support in the paragraph 2.2.3 caveat in which she made "no representations or warranties as to the whereabouts and/or existence of the above referenced personal property items to be distributed to" Goodrich. According to Korff, she "insisted upon the inclusion of the caveat and she wanted it stated because she knew one of the bank accounts allocated to Goodrich had a near zero balance," and she "wanted to make clear to Donna Goodrich and her attorneys that no representations were being made concerning the existence or whereabouts of the items allocated for Donna Goodrich to receive," which items Korff claims included the eight listed accounts. This, she insists, confirmed that "the parties contemplated the risk regarding the existence or balance of the accounts and personal property allocated to Goodrich." It is patently clear that the caveat, which is the final sentence in paragraph 2.2.3, referred only to the Dietrich print, the photograph, and costume jewelry allocated to Goodrich in paragraph 2.2.3, and was not intended to apply to assets referenced in other paragraphs of the settlement agreement. Korff blames the placement of the caveat on the mediator, but if it was not intended as a qualifier relating solely to the items allocated in paragraph 2.2.3, it was incumbent upon Korff to insist on its correct placement in the settlement agreement. She did not do so—no doubt because the mediator placed it precisely where Korff intended it to be.
We do not rely solely on the language of the settlement agreement in determining that it is not reasonably susceptible to Korff's interpretation: extrinsic evidence convinces us of this as well. (Horath v. Hess, supra, 225 Cal.App.4th at pp. 463-464.) "Acts of the parties, subsequent to the execution of the contract and before any controversy has arisen as to its effect, may be looked to in determining the meaning. The conduct of the parties may be, in effect, a practical construction thereof, for they are probably least likely to be mistaken as to the intent." (1 Witkin, Summary of Cal. Law (11th ed. 2017) Contracts, § 772, p. 828; Southern Cal. Edison v. Superior Court, supra, 37 Cal.App.4th at p. 851 ["in construing the terms of a contract the construction given it by the acts and conduct of the parties with knowledge of its terms, and before any controversy has arisen as to its meaning, is admissible on the issue of the parties' intent"].) As the Supreme Court stated in Crestview Cemetery Assn. v. Dieden (1960) 54 Cal.2d 744, 754: "This rule of practical construction is predicated on the common sense concept that 'actions speak louder than words.' Words are frequently but an imperfect medium to convey thought and intention. When the parties to a contract perform under it and demonstrate by their conduct that they knew what they were talking about the courts should enforce that intent." (Accord, Cedars-Sinai Medical Center v. Shewry (2006) 137 Cal.App.4th 964, 983 ["A party's conduct subsequent to the formation of a contract may be looked upon to determine the meaning of disputed contractual terms"]; Oceanside 84, Ltd. v. Fidelity Federal Bank (1997) 56 Cal.App.4th 1441, 1449 ["conduct of the parties after the execution of the contract, and before any controversy arose, may be considered in order to attempt to ascertain the parties' intention"].)
Korff protests that we are precluded from considering extrinsic evidence because the probate court did not consider it. She is wrong. As noted above, the threshold question of whether the settlement agreement is ambiguous is a question of law that we review de novo. (Horath v. Hess, supra, 225 Cal.App.4th at pp. 463-464.)
She also contends that the parol evidence rule, set forth in Code of Civil Procedure section 1856, bars reliance on extrinsic evidence here because paragraph 8 of the settlement agreement provides that the agreement " 'constitutes the entire agreement between the Parties,' " such that it is the "complete and exclusive statement of the terms of the settlement . . . ." Again, she is wrong. The parol evidence rule " 'generally prohibits the introduction of any extrinsic evidence, whether oral or written, to vary, alter or add to the terms of an integrated written instrument.' " (Casa Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336, 343.) The rule does not, however, prohibit the introduction of extrinsic evidence to ascertain whether the agreement is reasonably susceptible to more than one interpretation. (Horath v. Hess, supra, 225 Cal.App.4th at pp. 463464.)
While, strictly speaking, the rule of practical construction applies only when a contract is ambiguous and a court is attempting to ascertain the intent of the parties (Crestview Cemetery Assn. v. Dieden, supra, 54 Cal.2d at p. 754), the concept that "actions speak louder than words" is equally applicable here. In this regard, Korff's conduct was very telling, particularly statements she herself made in numerous court filings, beginning with her petition for preliminary distribution, filed two months after the settlement. In that petition, she represented that the three I&As, which referenced only the eight original accounts, included "all of the assets of the estate." Appended to the petition was the settlement agreement, which in turn appended the final I&A. As noted, that I&A listed three of the original eight accounts with their date-of-death balances. Nowhere did Korff identify the two BOTW accounts as assets of the estate, indicating that she, like Goodrich, was focused on the funds in Bentley's accounts on the date of his death, not on the particular institutions and account numbers.
Further, Korff's petition detailed the estate assets she was seeking, listing only the Beelard Drive house, the vehicles, and "all remaining personal property except as provided in Paragraph 2.2.3 of the settlement agreement and mutual release attached hereto as Exhibit 'A,' which specifically excludes the Dietrich Grunweld [sic] Print . . . , the adolescent profile photograph of Donna Goodrich, certain costume jewelry consisting of jade pendent, butterfly pin, and women's silver watch." If Korff settled the will contest believing she was to receive financial assets worth upwards of $350,000, it defies credulity to believe she would not have identified those assets among the property she was to receive.
Korff's petition also impliedly confirmed that the financial accounts would remain in the estate after she received her distribution. It acknowledged that after the proposed preliminary distribution, sufficient liquid assets would remain in the estate to pay all fees, costs, and claims. It also represented that Korff would deliver a check for $20,000 to Kiernan under the terms of the settlement agreement. If Korff truly believed the money in the BOTW accounts belonged to her, why would she consider it necessary to deposit an additional $20,000 of her own money for estate costs? This representation only made sense if she believed the cash assets belonged to Goodrich.
Korff argues that in its October 5, 2016 order finding that her liability for costs was capped at $20,000, the court ordered that "Korff's liability may be paid as a deduction against her final distribution." This, she contends, demonstrates the court's understanding that the preliminary distribution to Korff was not her full and final distribution. At the July 12, 2016 hearing when the court ruled on the issue, it ordered "that Nancy Korff's share of the estate is liable for 50 percent of the 'statutory fees, the extraordinary attorneys' fees, and David's estate administrator's fees incurred by attorney Betty Homer and the court-appointed administrator, Thomas J. Kiernan, or $20,000, whichever is less.' " It did not order that Korff's liability was to be deducted from her final distribution. This language was apparently inserted in the written order prepared by Korff's attorney, and it does not appear to reflect the intent of the court when it ruled. It cannot reasonably be construed as confirming the court's understanding that the preliminary distribution to Korff was not her full and final distribution.
Korff's June 2, 2016 reply in support of her petition is perhaps even more telling. There, she did more than not seek distribution of the BOTW accounts to herself—she affirmatively stated under penalty of perjury that the settlement agreement provided for Goodrich to receive all of the estate's cash assets: "As outlined above, all parties had an updated balance of estate cash accounts at mediation. [Korff's] final substantive offer to [Goodrich] related to estate assets was that [Goodrich] would keep all cash accounts in the estate and some personal property, and [Korff] would receive the real property, vehicles, and remaining personal property otherwise outlined in the Settlement Agreement." (Italics added.) Likewise, the concluding paragraph of her reply summarized: "The four corners of the Settlement Agreement make this simple: 1) [Korff] receives the real property, vehicles, and other personal property items outlined in the agreement; 2) [Goodrich] receives the cash accounts, promissory note, and personal property items outlined in the agreement; 3) [Korff] is to pay $20,000.00 into the estate representing 50% of the fees capped at $40,000.00; and 4) [Goodrich] is to pay all fees and costs in excess of that amount." (Italics added) Korff demonstrated by all of this that she had the same intent as Goodrich: the physical assets were to go to Korff, the financial assets to Goodrich.
Korff's attempt to explain away her own prior representations is feeble at best. She reasons that the qualifier "otherwise outlined in the Settlement Agreement" meant that "Goodrich was to receive all cash accounts as 'outlined in the Settlement Agreement,' " which would be the eight original accounts listed in paragraph 2.2.2. This is a convoluted construction of her prior representations to the court. It is abundantly evident that the qualifier applied only to personal property itemized in the settlement agreement, as it directly followed the phrase "personal property" and was not offset by a comma.
Korff accuses Goodrich of "deception" because Goodrich's quotation of this passage from Korff's petition omits the final six words "otherwise outlined in the Settlement Agreement." The accusation is baseless, as the omitted language was insignificant since it referred only to the phrase "remaining personal property" that immediately preceded it.
If Korff's own conduct were not enough, her attorney Canning likewise confirmed the parties intended for Goodrich to receive the estate's cash assets. At the July 12, 2016 hearing on the cost allocation issue, he advised the court, "At this point, the real property and all personal property has been distributed to our client. The only remaining issue for the Court to decide was the payment of the expenses of administration, and we believe that was covered in the settlement agreement." (Italics added.) Korff makes no effort to explain away her counsel's representation to the court that, having received the house, vehicles, and certain tangible personal property, she had received everything to which she was entitled.
Just as telling as Korff's statements are her omissions. In April 2016, Kiernan filed a response to Korff's petition for preliminary distribution in which he advised that the eight original accounts no longer existed, the funds having been transferred to the two BOTW accounts, and indicating that the settlement agreement allocated the funds to Goodrich. Korff did not dispute Kiernan's averments, only asserting her entitlement to the BOTW accounts an entire year later. Like the above-detailed representations, this omission is uniquely trustworthy because it occurred in the context of the dispute regarding the cost-sharing provision, before any dispute regarding the distributive clause arose. (See, e.g., Universal Sales Corp. v. California Press Mfg. Co. (1942) 20 Cal.2d 751, 761 ["when a contract is ambiguous, a construction given to it by the acts and conduct of the parties with knowledge of its terms, before any controversy has arisen as to its meaning, is entitled to great weight, and will, when reasonable, be adopted and enforced by the court"].)
We close our discussion of this issue with a recap: Our initial task in resolving this contract dispute is determining de novo whether the settlement agreement is ambiguous, that is, reasonably susceptible to more than one interpretation. If the contract language and extrinsic evidence demonstrate that the settlement agreement is reasonably susceptible to only one interpretation, the agreement is unambiguous and our inquiry is over. That, as demonstrated above, is the situation here. The language of the settlement agreement and extrinsic evidence easily persuade us the agreement is only susceptible to one interpretation—that the parties intended for Goodrich to receive the funds that were in her father's eight accounts at the time of his death, regardless of where they resided at the time of the settlement. The probate court was therefore correct in overruling Korff's objection to Kiernan's proposed distribution of the BOTW accounts.
Because our review is de novo, we disregard Korff's lengthy—and erroneous—argument that the probate court's ruling was based on a mistaken belief that the funds were transferred from the eight original accounts to the two BOTW accounts after the settlement.
2. The Probate Court Did Not Err in Declining to Rule on Korff's Claim to the Estate's Refunds
Korff's second argument, comprising a single page in her 64-page opening brief, asserts that the probate court erred in not ruling on her claim to $15,243.64 in refunds received by the estate, funds she claims she was entitled to under the residuary clause in the settlement agreement. As noted above, and as Korff concedes, she first raised this issue in her reply in support of her objection to Kiernan's petition for final distribution, and then again in her reply to Goodrich's supplemental response to her objection. Both times, it was a brief mention in an otherwise dense filing focused primarily on the allocation of the BOTW accounts and valuation of the Beelard Drive house. At the November 15, 2017 hearing, the probate court declined to rule on the issue because it had not been properly raised.
According to Goodrich, the actual amount of the refunds was $10,594.63.
Korff argues here that the papers raising the issue were duly filed and served, noting that they were filed more than three months in advance of the November 15, 2017 hearing. This ignores that it is improper to raise a new issue in reply papers. (See, e.g., San Diego Watercrafts, Inc. v. Wells Fargo Bank (2002) 102 Cal.App.4th 308, 310, 312 [reversing summary judgment where moving party submitted with the reply papers a supplemental declaration containing new facts]; Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 764 [refusing to consider new issues raised in reply brief]; American Drug Stores, Inc. v. Stroh (1992) 10 Cal.App.4th 1446, 1453 ["Points raised for the first time in a reply brief will ordinarily not be considered, because such consideration would deprive the respondent of an opportunity to counter the argument"].) For this reason, the probate court did not err in declining to consider Korff's belatedly asserted claim to the refunds.
3. There Was No Error Relating to the Beelard Drive House Appraisal
Korff next asserts multiple arguments relating to the Beelard Drive house appraisal. We address—and reject—them in turn.
Korff first argues that she had a right to request a corrected I&A because her objection to the Beelard House appraisal was timely. Probate Code section 8906, subdivision (a) provides in pertinent part that "an interested person may file with the court a written objection to the appraisal" "any time before the hearing on the petition for final distribution of the estate . . . ." Korff did indeed file her objection before the hearing on Kiernan's petition for final distribution. But simply because the Probate Code allows a party to object to an appraisal at "any time before the hearing on the petition for final distribution" does not then mean that any objection filed before the hearing on the petition for final distribution is warranted. It is still subject to Probate Code section 8906, subdivision (e), which provides that "If the court determines the objection was filed without reasonable cause or good faith, the court may order that the fees of the personal representative and attorney and any costs incurred for defending the appraisal be made a charge against the person filing the objection."
This brings us to Korff's second claim—that her objection to the I&A was reasonable and made in good faith. The court's finding to the contrary was supported by substantial evidence. (See, e.g., Powell v. Tagami (2018) 26 Cal.App.5th 219, 234; In re Marriage of Corona (2009) 172 Cal.App.4th 1205, 1225-1226 [we review the court's factual findings for substantial evidence and its imposition of the surcharge for an abuse of discretion].) We need not reiterate the history of the dispute in detail, as this brief summary of the chronology suffices: In May 2015, Kiernan filed the final I&A that valued the Beelard Drive house at $230,000; in January 2016, Goodrich and Korff settled the will contest, agreeing that the $230,000 house would go to Korff; in April 2017, Korff objected to Kiernan's petition for final distribution, challenging, among other things, the appraised value of the house. The lapse of two years from when Kiernan filed the I&A to when Korff objected to it, combined with the intervening settlement that was grounded in part on the house being valued at $230,000, is substantial evidence supporting the court's finding that by failing to object when the I&A was filed, when she petitioned for distribution of the house, or when she received the house, Korff forfeited any objection to the house's value, and it was thus unreasonable for her to have filed her objection.
Moreover, Korff has not demonstrated there was merit to her request for reappraisal of the house. In a May 24, 2017 declaration, attorney Tagliarini described his conversation with the probate referee about the condition of this house, stating in part: "[The probate referee] advised me the deterioration noted in the letter would significantly affect his valuation of the property and he stated his valuation could be affected by at least $35,000." This is inadmissible hearsay, and Korff offered no evidence from the probate referee as to his position on the house appraisal—no evidence about what he knew when he valued the house at $230,000, no evidence about what Tagliarini told him, no evidence about how, if at all, the house's deteriorated condition would affect the appraisal. At the November 15, 2017 hearing, the court pressed Tagliarini as to what evidence he would produce if there was a hearing on the issue. Other than stating he would put Korff on the stand, Tagliarini identified no evidence he would introduce to prove error in the appraisal, ultimately deferring to the court's decision to proceed without an evidentiary hearing. Given the lack of evidence, Korff has failed to demonstrate any merit to her objection. The court's finding of unreasonableness and bad faith was well supported.
In a related argument, Korff challenges the probate court's imposition of the surcharge, claiming it constituted an abuse of the court's discretion because she had "both a statutory and contractual right to file her objection" and "the objection [was] demonstrated to be meritorious from a monetary standpoint." There was no abuse of discretion in light of the facts outlined above that support the probate court's finding that Korff's objection was unreasonable and made in bad faith.
Finally, Korff argues that Kiernan's refusal to sign the "corrected" I&A provided by attorney Tagliarini was a breach of his fiduciary duty. The argument consists in its entirety of the following paragraph: "The Administrator's refus[al] to sign and file a Corrected Inventory and Appraisal even after the Probate Referee decreased his appraised value of the Beelard Drive property by $30,000 constitutes a breach of his fiduciary duty. [Citation.] In as much as the corrected value had no detrimental impact upon Donna Goodrich, the only justification for the Administrator's refusal to sign the Corrected Inventory and Appraisal was to prioritize and maximize his own statutory fee over the interests of Nancy Korff. [Citation.] The Administrator's election to prioritize his own pecuniary interest over that of a beneficiary constitutes a breach of his fiduciary obligation." First, Korff's assertion that Kiernan declined to sign the "corrected" I&A out of his own self-interest is unsupported by the record. Second, the claim that "the corrected value had no detrimental impact upon Donna Goodrich" is false, as she was liable for any additional expenses incurred by Kiernan in dealing with this issue. And third, as already discussed, Korff produced no evidence proving that the Beelard Drive house appraisal needed correction. In light of this, Korff has not established Kiernan breached his fiduciary duty.
In her reply brief, Korff also alleges five ways in which Kiernan purportedly breached his duty of impartiality toward her, none of which she demonstrated below or here.
4. Korff's Appeal From the Order Authorizing Kiernan to Access Estate Funds to Defend Against Her Appeals Is Moot and Lacks Merit
Korff's final argument pertains to her third appeal, which appealed the probate court's June 1, 2018 order authorizing Kiernan to access estate funds to defend the estate from her appeals. She contends the court lacked jurisdiction to rule on Kiernan's request because the matter was stayed due to her appeals and her posting of a bond. This issue is moot because on July 26, 2018, Kiernan petitioned to confirm the June 1 order on the ground that Probate Code section 1310, subdivision (b) authorized the court to permit his to access estate funds to defend against Korff's appeals, which petition the probate court granted and which order Korff did not appeal. It is also moot because, as we have concluded above, Korff has no interest in the remaining assets of the estates and is thus not an aggrieved party with standing to oppose Kiernan's request. (Code Civ. Proc., § 902; Eisenberg, et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2018) ¶ 2:282, p. 2-177.)
As we read Korff's briefs, she makes no arguments relating to her second appeal, which appealed the probate court's order that she pay the $25,252.75 surcharge and $20,000 in estate expenses by February 20, 2018 and awarded Kiernan 75 percent of the fees he was requesting.
Korff's claim also lacks merit. As relevant here, Probate Code section 1310, subdivision (b) provides, "Notwithstanding that an appeal is taken from the judgment or order, for the purpose of preventing injury or loss to a person or property, the trial court may direct the exercise of the powers of the fiduciary . . . as if no appeal were pending." The order in question fell within the scope of this provision. Korff's response is that the court previously acknowledged no party was requesting an order under that section, citing a statement by the court at the January 18, 2018 hearing shortly after she filed her first appeal that "It's the Court's understanding that no party has asked for a Court Order under Probate Code section 1310, subdivision (b). Thus, the Court understands that subdivision (b) is inapplicable here." She takes this statement out of context, as it was made with regard to her appeal from the court's rulings on the distribution of the BOTW accounts, her objection to the Beelard House valuation, and the estate refunds, and had nothing to do with Kiernan's later request for authority to access estate funds to defend against Korff's appeals.
5. Sanctions Are Appropriate: The Appeals Are Frivolous
On May 23, 2019, Goodrich filed a motion seeking sanctions against Korff and her attorney, Thomas Tagliarini, for their filing and pursuit of the appeals. The motion asserted that the second and third appeals are frivolous "in their entirety," and that all the issues raised in the first appeal are frivolous "with the possible exception of the issue concerning the appropriate distribution of certain refunds." Because, as noted, Korff's liability for Kiernan's fees are capped at $20,000, Goodrich requests sanctions sufficient to reimburse both her and Kiernan for attorney fees and costs incurred in defending against the appeals, specifically, $49,875 for herself, which includes fees incurred in preparing the respondent's brief and the motion for sanctions, and $41,209 for Kiernan. The motion is supported by declarations of Goodrich's attorney Gerald Clausen and the estate's attorney Betty Homer, both of whom testified in detail regarding the fees incurred.
The fees requested on behalf of Kiernan exclude time spent responding to Korff's argument regarding the tax refunds, as well as time spent on other miscellaneous issues, such as opposing Korff's motion to consolidate the appeals.
On September 3, the clerk of this court issued notice to Tagliarini that we are considering the imposition of sanctions on him and/or his client for filing frivolous appeals. (See Cal. Rules of court, rule 8.276(a)(1); In re Marriage of Flaherty (1982) 31 Cal.3d 637, 654 (Flaherty); In re Marriage of Schnabel (1994) 30 Cal.App.4th 747, 753.) The notice advised that opposition, if any, was to be filed in the form of a letter brief by noon on September 11.
On September 10, we received a letter from Tagliarini. The letter, discussed in detail below, is 11 pages, single spaced and, after a one-paragraph reference to some boilerplate law on sanctions, consists mostly of argument as to the claimed merits of the appeal.
On September 16, we heard argument, including on the issue of sanctions. And we now conclude they are appropriate.
Civil Code of Procedure section 907 provides that "[w]hen it appears to a reviewing court that the appeal was frivolous or taken solely for delay, it may add to the costs on appeal such damages as may be just." And California Rules of Court, rule 8.276, subdivision (a)(1), provides that on motion of a party the Court of Appeal may impose sanctions on a party or an attorney for "[t]aking a frivolous appeal or appealing solely to cause delay."
In Flaherty, supra, 31 Cal.3d 637, our Supreme Court said that "an appeal should be held to be frivolous only when it is prosecuted for an improper motive—to harass the respondent or delay the effect of an adverse judgment—or when it indisputably has no merit—when any reasonable attorney would agree that the appeal is totally and completely without merit." (Id. at p. 650.)
As one court described it, "In determining whether an appeal indisputably has no merit, California cases have applied both subjective and objective standards. The subjective standard looks to the motives of the appealing party and his or her attorney, while the objective standard looks at the merits of the appeal from a reasonable person's perspective. [Citation.] Whether the party or attorney acted in an honest belief there were grounds for appeal makes no difference if any reasonable person would agree the grounds for appeal were totally and completely devoid of merit. [Citation.]
"The objective and subjective standards 'are often used together, with one providing evidence of the other. Thus, the total lack of merit of an appeal is viewed as evidence that appellant must have intended it only for delay.' [Citation.] An unsuccessful appeal, however, ' "should not be penalized as frivolous if it presents a unique issue which is not indisputably without merit, or involves facts which are not amenable to easy analysis in terms or existing law, or makes a reasoned argument for the extension, modification, or reversal of existing law." ' " (Kleveland v. Siegel & Wolensky, LLP (2013) 215 Cal.App.4th 534, 556-557 (Kleveland), citing, inter alia, Flaherty, supra, 31 Cal.3d at pp. 649-650.)
While the two standards are often used together, only one standard need be satisfied in order for sanctions to be imposed. So, if an appeal is objectively frivolous, sanctions may be imposed even if the record fails to demonstrate that the appeal was subjectively frivolous. (Maple Properties v. Harris (1984) 158 Cal.App.3d 997, 1009.) Alternatively, "if the reviewing court finds that the appeal is taken solely for an improper motive, it is not necessary that it also find that the appeal lacks merit, as measured by an objective standard." (9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 991, p. 1041.)
As to the first, and primary, appeal, our opinion sets out the various, and numerous, reasons why Korff's position below—a position the trial court called "absurd"—had absolutely no merit. That absurd position, it will be recalled, originated after Korff's original attorney, Canning, told the court on July 12, 2016, that "[a]t this point, the real property and all personal property has been distributed to our client. The only remaining issue for the court to decide was the payment of the expenses and administration . . . ." In other words, Canning told the court, Korff had received everything to which she was entitled, which did not include cash assets. Indeed, in her June 2, 2016 reply in support of her petition for preliminary distribution, Korff said under oath that the settlement agreement gave Goodrich all of the estate's cash assets.
Seven months later, in February 2017, Canning advised the court that Korff would be getting new counsel and objecting to the distribution, in essence taking a position utterly inconsistent with the position she herself had taken under oath. And Korff would go on to assert that the settlement agreement apportioned all of the cash assets to her rather than to Goodrich, Goodrich actually negotiated only for "whatever balance remained" in the eight accounts, Goodrich "acknowledged" the risk these accounts no longer existed, and in fact knew that at least some of them no longer existed, to the point of asserting the parties "understood" and "agreed" that Korff was to receive BOTW accounts #1746 and #4398.
We do not know if attorney Tagliarini was involved by this time or not, as his response does not state when he first came to represent Korff.
Given the degree of conflict between these two positions, they cannot be reconciled. And given the degree of specificity in Korff's exposition, they cannot possibly be explained as a mistake. And it can be inferred that Korff's latter position—and the appeal based on it—were taken merely to harass Goodrich and delay the distribution to her of the estate's remaining assets, in the process diminishing Goodrich's ultimate net recovery by forcing the expenditure of additional fees and costs by both the administrator and Goodrich herself.
As noted, the trial court found Korff's position "absurd." But this was not enough to discourage Korff. No, she went on to appeal the ruling, an appeal that would later be consolidated with two other appeals she would come to file, three appeals that, as demonstrated above, had absolutely no merit. And we repeat what we said in rejecting the first appeal: "As the probate court found, Korff's position is indeed absurd. She asks us to believe that after three mediation sessions—described by Goodrich's attorney as 'long, drawn-out mediation sessions that cost a lot of money for attorneys, mediators'—the parties agreed Goodrich would receive only a long past due promissory note and whatever remained in the original eight accounts that she purportedly knew might no longer exist, and she would additionally be responsible for half of the first $40,000 in estate costs and all costs beyond that, while Korff on the other hand would receive the Beelard Drive house, the 12 vehicles, all other tangible personal property save a print, a portrait, and costume jewelry, and the cash accounts valued at over $350,000. In other words, Korff would receive virtually the entire estate, while Goodrich would essentially receive nothing other than a few tangible items and would be liable for tens of thousands of dollars in costs. This interpretation is nothing short of preposterous."
Korff's appeal was objectively unreasonable. It was frivolous. And Korff must be sanctioned for it. So should Tagliarini.
We acknowledge that we do not know if Korff's new position was her idea, and she located Tagliarini to pursue it, though we assume it was, based on Canning's statement to the court—and his distancing himself from Korff's promised objection. Regardless, it does not matter, not in light of Business and Professions Code section 6068, which provides in relevant part that an attorney has duties "(c) To counsel or maintain those actions, proceedings, or defenses only as appear to him or her legal or just, . . . [¶] [and] (d) To employ, for the purpose of maintaining the causes confided to him or her those means only as are consistent with truth, and never to seek to mislead the judge or any judicial officer by an artifice or false statement of fact or law."
Concerning such responsibility in the sanctions arena, the leading appellate commentary has this to say: "Appellate sanctions are primarily directed at deterring future similar conduct by the blameworthy party. Generally, counsel can be viewed as shouldering the greatest blame because of his or her professional responsibility not to pursue an appeal that is frivolous or taken for purposes of delay 'just because the client instructs him or her to do so' and, under such circumstances, to withdraw from employment. (Cal. Rules Prof. Conduct 1.16(b)(1.))." (Eisenberg, et al., Cal. Practice Guide: Civil Appeals and Writs, supra, at ¶ 11:123, p. 11-54.)
We assessed sanctions against counsel in Keitel v. Heubel (2002) 103 Cal.App.4th 324, 342, saying this: " '[C]ounsel has a professional responsibility not to pursue an appeal that is frivolous . . . just because the client instructs him or her to do so. [Citations.]' " Or, as our colleagues in Division Five have put it, "An attorney in a civil case is not a hired gun required to carry out every direction given by the client. (Bus. & Prof. Code, § 6068, subd. (c).) As a professional, counsel has a professional responsibility not to pursue an appeal that is frivolous or taken for the purpose of delay, just because the client instructs him or her to do so. (Rule 2-110(C), Rules Prof. Conduct.) Under such circumstances, the high ethical and professional standards of a member of the bar and an officer of the court require the attorney to inform the client that the attorney's professional responsibility precludes him or her from pursuing such an appeal, and to withdraw from the representation of the client." (Cosenza v. Kramer (1984) 152 Cal.App.3d 1100, 1103.)
Tagliarini's lengthy letter did not set forth what he did prior to filing the verified objection on April 12, 2017—whom he talked to, what he reviewed, or what research he did, if any. We thus do not know whether he reviewed Korff's prior position under oath and/or Canning's representations to the court. Indeed, we do not even know if he talked to Korff about her prior testimony, or about what went on in the three sessions of mediation.
At oral argument Tagliarini said that he did have a conversation with Canning.
Tagliarini's letter brief asserts, without support, that Goodrich "understood that she was entering into the [settlement] agreement in the face of risks and ambiguities regarding the assets of the estate"; it also asserts that he advocated for Korff in a "courteous and gracious manner." And his letter concludes that he "honestly, genuinely and whole-heartedly believe[s] that each and every issue raised in the appeals is meritorious," that he knows, "without hesitation or self-examination, that none of the appeals were filed for an improper purpose, because that was never the intent or motive." Maybe so. But as we recently said, quoting Kleveland, supra, 215 Cal.App.4th at pp. 556-557, " 'Whether the party or attorney acted in an honest belief there were grounds for appeal makes no difference if any reasonable person would agree the grounds for appeal were totally and completely devoid of merit.' " (J.B.B. Investment Partners Ltd. v. Fair (2019) 37 Cal.App.5th 1, 16.)
At oral argument Tagliarini claimed it is difficult to be an appellant because Courts of Appeal want to affirm, and his client was in a particularly difficult situation here because she was advocating a literal interpretation of the settlement agreement that would result in a disproportionate distribution of Bentley's estate. But even the most preliminary research regarding the fundamental principles of contract interpretation, combined with the facts in the record, would have led a reasonable attorney to conclude that the literal interpretation advanced by Korff was totally and completely devoid of merit. (See Summers v. City of Cathedral City (1990) 225 Cal.App.3d 1047, 1080 ["appeal resulted solely from failure of plaintiff's counsel to adequately research the merits of plaintiff's case prior to undertaking the appeal of the adverse judgment"].) Indeed, as we have observed in a case involving malicious prosecution against an attorney, failure to research "indicates 'a degree of indifference from which one could . . . infer malice.' " (Lanz v. Goldstone (2015) 243 Cal.App.4th 441, 468, quoting Sycamore Ridge Apartments LLC v. Naumann (2007) 157 Cal.App.4th 1385, 1409.)
Nevertheless, proceed Tagliarini did, vigorously asserting a claim that the court below called "absurd." Undeterred, Tagliarini pushed on and appealed, filing a 64-page opening brief. Goodrich answered with a 64-page brief, Kiernan with 50 pages, not only arguing against the appeals, but having to support his own reputation as he did so. And as demonstrated above, not one argument in Korff's 64 pages had merit, as we easily affirmed all three appeals, noting among other things that Korff did not even argue in support of the second appeal, and that the third appeal not only lacked merit, but was moot.
As best we understand, Kiernan is a respected professional fiduciary. Nevertheless, Korff's position below, and here, was to accuse him of numerous instances of "bias and breach of fiduciary duty," and of prioritizing and maximizing his own self-interest over Korff's.
As to the appropriate amount of the sanctions, " '[f]actors relevant to determining the amount of sanctions to be awarded a party responding to a frivolous appeal include "the amount of respondent's attorney fees on appeal; the amount of the judgment against appellant; the degree of objective frivolousness and delay; and the need for discouragement of like conduct in the future. " ' " (Kleveland, supra, 215 Cal.App.4th at p. 558.) Thus, cases recognize it is appropriate to assess sanctions in the amount of attorney fees and costs incurred in defending against the appeal. (Diaz v. Professional Community Management, Inc. (2017) 16 Cal.App.5th 1190, 1217 [respondent's fees and costs in resisting appeal and in preparing for aborted trial]; Millennium Corporate Solutions v. Peckinpaugh (2005) 126 Cal.App.4th 352, 362.) We may also consider "the degree of objective frivolousness and/or delay." (Eisenberg, et al., Cal Practice Guide: Civil Appeals and Writs, supra, at ¶ 11:141, p. 11-61, citing DeRose v. Heurlin (2002) 100 Cal.App.4th 158, 182, and Foust v. San Jose Construction Co., Inc. (2011) 198 Cal.App.4th 181, 189.)
As noted, Goodrich's counsel filed a declaration supporting attorney fees of $49,875, and the declaration from Kiernan's counsel supports $41,209 expended on his behalf. Tagliarini's letter says nothing about the amounts sought, they are well supported, and it is hard to imagine a greater "degree of objective frivolousness." We thus assess sanctions in those amounts, assessed jointly and severally against Korff and Tagliarini, her attorney. (See Pierotti v. Torian (2000) 81 Cal.App.4th 17, 36-37.)
As noted, Goodrich's motion for sanctions acknowledged that there might be one issue in the first appeal that was arguably not frivolous, an issue that we rejected. But even if an entire appeal is not frivolous, "[s]anctions for an appeal which is partially frivolous are appropriate if the frivolous claims are a significant and material part of the appeal." (Maple Properties v. Harris, supra, 158 Cal.App.3d 997, 1010; accord, Pollock v. University of Southern California (2003) 112 Cal.App.4th 1416, 1432.) That certainly describes the situation here. --------
The orders of November 15, 2017, January 18, 2018, and June 1, 2018 are affirmed and Goodrich and Kiernan shall recover their costs on the three appeals. Korff and her attorney Thomas Tagliarini are ordered to pay $49,875 in sanctions to Goodrich and $41,209 in sanctions to Kiernan for bringing the frivolous appeals. These obligations are joint and several, and sanctions shall be paid no later than 30 days after the date the remittitur is issued.
Richman, J. We concur: /s/_________
Kline, P. J. /s/_________