Litigation Alert
| Publication year | 2015 |
| Author | By Mary F. Gillick, Esq., Catherine M. Swafford, Esq.,and Matthew R. Owens, Esq. |
By Mary F. Gillick, Esq.,* Catherine M. Swafford, Esq.,*and Matthew R. Owens, Esq.*
The California Supreme Court held an unambiguous will may be reformed if clear and convincing evidence establishes the will contains a mistake in the expression of settlor's intent at the time the will was drafted and also establishes settlor's specific intent.
Settlor executed a holographic will providing that his estate would pass to his wife, or, if he and his wife died at the same time, to two charities. The will did not, however, contain a separate dispositive provision in the event settlor's wife predeceased him, which she did. When settlor died, the two charities petitioned for probate and sought reformation of the will leaving them the entire estate under the theory there was a mistake in the will. Settlor's nephews, his sole intestate heirs, petitioned for determination of entitlement to estate distribution, asserting the estate had to pass under the laws of intestacy because there was no dispositive provision in the will in the event settlor's wife predeceased him. Nephews moved for summary judgment. The trial court ruled that, because the will was not ambiguous, it could not consider the extrinsic evidence offered by the charities in an attempt to establish settlor's intent to leave them his estate notwithstanding the absence of any express provision to that effect in the will. As a result, the trial court granted the motion for summary judgment. The Court of Appeal affirmed based on the factually similar California Supreme Court case of Estate of Barnes (1965) 63 Cal.2d 580. The charities petitioned for review.
The California Supreme Court reversed. After an extensive review of relevant legislative history, the Court determined the Legislature did not foreclose further judicial developments on the law concerning the admissibility of evidence to discern a settlor's intent. The Court also noted that it was not compelled by principles of stare decisis to adhere to law that warranted correction. Bringing California in line with the modern trend on reformation of wills, and consistent with California reformation law in other contexts such as trusts and contracts, the Court fashioned a new rule that permits introduction of extrinsic evidence to reform an unambiguous will based on mistake. The Court held that an unambiguous will may be reformed if mistake in expression and the testator's actual and specific intent at the time the will was drafted are established by clear and convincing evidence. Since the charities advanced a valid theory that, if proven by clear and convincing evidence, would warrant reformation of the will, the Court remanded the matter for trial and consideration of the charities' extrinsic evidence.
The First District Court of Appeal held that a successor conservator may sue the predecessor conservator's attorneys for malpractice under the successor fiduciary exception, and the predecessor conservator's malfeasance is not imputed to the successor conservator as a defense.
In the underlying conservatorship proceeding, the predecessor conservator represented there were no conservatorship assets as all of the conservatee's assets were held in her trust. As a result, the trial court waived bond. The predecessor conservator then misappropriated over $1 million of the conservatee's assets and was replaced by a successor conservator. The successor conservator brought a malpractice claim against the predecessor conservator's attorneys, alleging that they knew the conservatee had assets in her name, that the attorneys assisted the predecessor conservator in managing those assets, and that the attorneys failed to inform the probate court about those assets as required by Probate Code section 2320.1 and California Rules of Court, rule 7.204(b). The trial court sustained the attorneys' demurrer to the malpractice complaint on the grounds the attorneys' relationship was with the predecessor conservator and they therefore owed no duty of care to the successor fiduciary. The trial court also sustained the attorneys' demurrer on the grounds that the predecessor conservator's malfeasance is imputed to the successor conservator, so the attorneys could assert the unclean hands defense. The successor conservator appealed.
The Court of Appeal reversed and held that the successor fiduciary exception applied. Where a fiduciary who hires an attorney is replaced, the successor fiduciary succeeds to the same powers the predecessor held, including the power to sue for malpractice. (Borissoff v. Taylor & Faust (2004) 33 Cal.4th 523, 530.) The attorneys argued that the successor fiduciary exception in Borissoff applies only where an attorney fails to follow the specific instruction of a predecessor fiduciary. But the Court of Appeal pointed out that the statute authorizing successor fiduciaries to initiate lawsuits is much broader than that and they may be commenced in any case where the malpractice of a predecessor fiduciary's attorney damaged the estate.
[Page 48]
The attorney defendants also argued that the predecessor conservator's malfeasance is imputed to the successor conservator, barring the malpractice action under the doctrine of unclean hands. This case is distinguishable, however, from Blain v. Doctor's Co. (1990) 222 Cal.App.3d 1048, where a doctor sued his lawyers for malpractice after the lawyers advised him to lie at his deposition. Blain did not address a claim by a successor fiduciary. It would be unfair for the predecessor conservator to sue his attorneys for malpractice to profit from his own wrongdoing, but it is fair for the successor conservator to sue the predecessor's attorneys for malpractice on behalf of the injured estate. Otherwise, no competent individual would agree to serve as a successor fiduciary and no one could sue on behalf of the damaged conservatorship estate.
The Fourth District Court of Appeal held that former Probate Code section 21350 et seq. continues to govern transfers made before January 1, 2011, and that a transfer is defined as donative if the transfer is for zero, unfair, or inadequate consideration.
In 2007, Decedent signed a quitclaim deed transferring a house and a lot to Teegarden, who was a friend who provided Decedent with part-time housekeeping and bookkeeping services. Teegarden prepared the deed. At the time, the house was worth $480,000. Decedent's stepdaughter filed an action to invalidate the deed on the basis that it was a donative transfer under Probate Code section 21350. Teegarden testified at her deposition that she bought the house from decedent for $1 and her friendship. However, at trial, she testified that she gave consideration for the property in the form of $100,000, which she paid to improve the house, and plus around $45,000 of equity in another house. The trial court found that the quitclaim deed did not constitute a donative transfer. The stepdaughter appealed.
The Court of Appeal reversed. Former Probate Code section 21350 et seq. provides a donative transfer to an unrelated drafter of an instrument is presumptively invalid unless it is reviewed by an independent attorney or approved by the court. In 2010, former Probate Code section 21350 et seq. was repealed effective January 1, 2014, and Probate Code section 21380 et seq. was enacted, effective, January 1, 2011. Section 21380 et seq. essentially has the same effect as former Section 21350 et seq. Teegarden argued repeal of Section 21350 et seq. destroyed the stepdaughter's claims under the statutory repeal doctrine, because the Legislature did not include an express savings clause. However, the Law Revision Commission Comment to Probate Code section 21392 provides that instruments that became irrevocable before January 1, 2011, remain governed by the former law. Thus, the stepdaughter's claims withstood the repeal. Teegarden also argued the transfer was not donative. The Probate Code does not define the term "donative transfer," but the legislative history indicates that it means a transfer for zero, unfair, or inadequate consideration. Relying on the law of specific performance of contracts, the Court concluded that consideration is adequate when the price received is fair and reasonable under the circumstances. Teegarden did not provide adequate consideration because the $100,000 investment did not benefit Decedent, Decedent already owed the $45,000 of equity in the other house, and Decedent paid Teegarden for her services. Accordingly, the quitclaim deed was a donative transfer
The Fourth District Court of Appeal held that a litigant who is the sole settlor, trustee, and beneficiary of a revocable trust may litigate against third parties in propria persona.
Aulisio brought an action individually and as trustee of his revocable trust, and sought to litigate the case in propria persona. Relying on case law that holds that an executor and trustee may not appear in court proceedings in propria persona, the trial court...
To continue reading
Request your trial