Barefoot v. Jennings, Supreme Court of California (January 23, 2020), Standing Under Cal. Probate Code §17200, and More . . .

Barefoot v. Jennings, Supreme Court of California (January 23, 2020), S251574, 2020 WL 372523

Summary and Holding: (1) Settlor Maynord executed eight amendments (amendment numbers 17 through 24) to the trust through which petitioner’s/plaintiff’s share of the trust as set out in the 16th amendment was eliminated; (2) the Court held that petitioner/plaintiff, an ex-beneficiary, has standing to bring an action under Cal. Probate Code §17200 to challenge the validity of the trust amendments where she alleges that the amendments that disinherited her were invalid because Maynord was incompetent to make the amendments; the amendments were the product of respondents’/defendants’ undue influence; and the amendments were the product of respondents’/defendants’ fraud; (3) §17200 allows a trustee or a beneficiary to petition the Court; (4) petitioner/plaintiff had standing under §17200 because although she is not currently a beneficiary, she would or will be a beneficiary if her allegations are proven.

The following are my initial comments:

  1. I don’t understand why the Court went down this path – petitioner already had standing to challenge or contest the trust amendments under her three theories (lack of mental capacity, undue influence, and fraud) – §17200 wasn’t necessary to provide petitioner with standing. Nevertheless, the holding is as it is.
  2. Allegations of lack of mental capacity, undue influence, and fraud can or might trigger a no contest clause – does bringing the action under §17200 in some manner change (lower or eliminate) that argument? See also footnote 3 in this regard.
  3. It is interesting that since petitioner was provided benefits under the 16th amendment, she had to argue that the 17th through 24th amendments are all invalid.
  4. The Court’s decision is not based on the Legislative intent – I would have thought that it would be, or at least that the Court would have thought that the Legislative intent would be relevant.
  5. In its decision the Court specifically declines to discuss or interpret Cal. Probate Code §850. That would have been an interesting discussion as I have had cases involving allegations pertaining to §850 (and §859) and when someone has standing or not – there is almost no case law on this topic although there is Legislative history. For example, one provision of §850 provides that in particular circumstances a trustee or an interested person has standing to bring a petition – but absent case law, I would not view “interested person” under §850 as being the same as “beneficiary” in the context of the Barefoot v. Jennings discussion under §17200.
  6. The Court’s decision is of interest for additional reasons, including, for example, the Court’s affirmation that in construing a trust the Court’s primary duty is to give effect to the settlor’s intentions, and the Probate Court has extremely broad power and authority to apply equitable and legal principles in order to assist its function as a Probate Court, and is given broad jurisdiction over practically all controversies that might arise between trustees and those claiming to be beneficiaries of the trust (including to preserve trust assets and the rights of all purported beneficiaries while the Court adjudicates the standing issue).

We can expect that more decisions will be forthcoming relating to the impact of the holding in Barefoot v. Jennings, potential issues that I have discussed above, standing under §17200, and the entirety of §850, et seq.

You can click on the following link for a copy of Barefoot v. Jennings Barefoot v Jennings California Supreme Court

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Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation.

Thank you for reading this post. I ask that you also pass it along to other people who would be interested as it is through collaboration that great things and success occur more quickly. And please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

Best to you, David Tate, Esq. (and inactive California CPA) – practicing in California only.

I am also the Chair of the Business Law Section of the Bar Association of San Francisco.

Blogs: Trust, estate/probate, power of attorney, conservatorship, elder and dependent adult abuse, nursing home and care, disability, discrimination, personal injury, responsibilities and rights, and other related litigation, and contentious administrations http://californiaestatetrust.com; Business, D&O, board, director, audit committee, shareholder, founder, owner, and investor litigation, governance, responsibilities and rights, compliance, investigations, and risk management  http://auditcommitteeupdate.com

My law practice primarily involves the following areas and issues:

Probate Court Disputes and Litigation

  • Trust and estate disputes and litigation, and contentious administrations representing fiduciaries and beneficiaries; elder abuse; power of attorney disputes; elder care and nursing home abuse; conservatorships; claims to real and personal property; and other related disputes and litigation.

Business and Business-Related Disputes and Litigation: Private, Closely Held, and Family Businesses; Public Companies; and Nonprofit Entities

  • Business v. business disputes including breach of contract; unlawful, unfair and fraudulent business practices; fraud, deceit and misrepresentation; unfair competition; licensing agreements, breach of the covenant of good faith and fair dealing; etc.
  • Misappropriation of trade secrets
  • M&A disputes
  • Founder, officer, director and board, investor, shareholder, creditor, VC, control, governance, decision making, fiduciary duty, conflict of interest, independence, voting, etc., disputes
  • Buy-sell disputes
  • Funding and share dilution disputes
  • Accounting, lost profits, and royalty disputes and damages
  • Access to corporate and business records disputes
  • Employee, employer and workplace disputes and processes, discrimination, whistleblower and retaliation, harassment, defamation, etc.

Investigations and Governance

  • Corporate and business internal investigations
  • Board, audit committee and special committee governance and processes, disputes, conflicts of interest, independence, culture, ethics, etc.

The following are copies of the tables of contents of three of the more formal materials that I have written over the years about accounting/auditing, audit committees, and related legal topics – Accounting and Its Legal Implications was my first formal effort, which resulted in a published book that had more of an accounting and auditing focus; Chapter 5A, Audit Committee Functions and Responsibilities, for the California Continuing Education of the Bar has a more legal focus; and the most recent Tate’s Excellent Audit Committee Guide (February 2017) also has a more legal focus:

Accounting and Its Legal Implications

Chapter 5A, Audit Committee Functions and Responsibilities, CEB Advising and Defending Corporate Directors and Officers

Tate’s Excellent Audit Committee Guide

The following are other summary materials that you might find useful:

OVERVIEW OF A RISK MANAGEMENT PROCESS THAT YOU CAN USE 03162018

Audit Committee 5 Lines of Success, Diligence, and Defense - David Tate, Esq, 05052018

COSO Enterprise Risk Management Framework ERM Components and Principles

From a prior blog post which you can find at https://wp.me/p75iWX-dk if the below scan is too difficult to read:

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New California case – California lacks personal jurisdiction over a Utah resident on a cross-complaint against her individually as a third party for intentional interference with prospective economic advantage, although the real property was located in California, and the Utah resident was appointed guardian ad litem for her mother in California

Keri Jensen v. Trine Jensen (Court of Appeal, Second Appellate District, B2896111, January 24, 2019), is very fact specific, so its value is mostly in the court’s legal evaluation as applied to this specific case. Frankly, I am a bit surprised by the court’s holding. Daughter Trine came to California and moved her mother back to Utah to stay with Trine. Trine was also appointed as guardian ad litem for her mother in California. Mother sued other daughter Keri in California relating to a parcel of real property that had been co-owned by mother and daughter Keri. In that lawsuit Keri then cross-complained against Trine personally and individually, not as guardian ad litem, for intentional interference with prospective economic advantage claiming that Trine took advantage of mom’s advancing dementia and coerced mom to sever the joint tenancy in the California real property.

Trine filed a motion to quash for lack of personal jurisdiction which the trial court granted and the court of appeal upheld. Since the parties apparently agreed that Trine was not subject to general jurisdiction in California, the court evaluated whether Trine purposefully availed herself of the California forum benefits, whether the controversy is related to or arises out of the Trine’s contacts in California, and whether California’s assertion of personal jurisdiction over Trine would comport with fair play and substantial justice.

It seems to me that this case is a close call as the real property is located in California. The court in dicta also made the point that Trine was not sued in California as guardian ad litem. I also note that there would be jurisdiction over Trine in Utah. The case also has other less relevant facts and is interesting reading relating to possible undue influence.

Thanks for reading this post. If you have found value in this post, I ask that you also pass it along to other people who would be interested as it is through collaboration that great things and success occur more quickly. And please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.

Every case situation is different. You do need to consult with professionals about your particular situation. This post is not a solicitation for services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation.

Best to you, David Tate, Esq. (and inactive California CPA) – practicing in California only

Blogs: California trust, estate, and elder abuse litigation and contentious administrations http://californiaestatetrust.com; D&O, audit committee, governance and risk management http://auditcommitteeupdate.com

Don’t delay: allegations of incompetence could give beneficiary standing, but delay in taking action could bar a beneficiary from contesting a trust or will at a later date (laches), Drake v. Pinkham

Drake v. Pinkham (California Court of Appeal, Third District, Case No. C068747, decided May 28, 2013, ordered for publication June 21, 2013).

This case involves a daughter’s (Gina) contest of two of her mother’s (Josephine) trust amendments (amendments dated 2001 and 2004) on the grounds that at the time of the amendments Josephine lacked mental capacity, was unduly influenced by a second daughter (Janice), and did not understand the amendments or her estate.  On a motion for summary judgment the trial court found that Gina’s contest was barred by the statute of limitations and principles of collateral estoppel.  On appeal, the Court of Appeal did not consider the statute of limitations or collateral estoppel issues, but instead found that Gina’s contest was barred by the defense of laches.

Gina filed her contest after her mother’s October 2009 death.  However, several years earlier, in 2005, Gina had filed a petition requesting the court to confirm her appointment as co-trustee under the terms of the trust and amendments dated 1992, 1993 and 1999.  Gina claimed that Josephine lacked the ability to care for herself or act as trustee and Janice’s alleged undue influence over her – Gina alleged that after the death of Josephine’s husband Theodore Janice began progressively isolating Josephine to the point that Gina no longer had contact with her mother, and that Janice had complete control over Josephine including her finances and was acting as the sole trustee of the trust.  Filed an objection to Gina’s 2005 petition and attached to her objection copies of her 2001 and 2004 trust amendments. The 2001 Fourth Amendment eliminated Gina as a beneficiary and named Janice as the sole successor trustee, and the 2004 Fifth Amendment designated Janice as Josephine’s acting co-trustee and sole successor trustee.  At that time in 2005 Gina did not challenge the 2001 or 2004 amendments.  Instead, Gina entered into a settlement agreement in which Josephine represented that she was the sole acting trustee, and in her capacity as such on behalf of all successor trustees, she agreed not to sell, encumber, lease, rent, transfer or otherwise take any action affecting any real property of the trust without prior notice to Gina and Janice as provided in the trust.

On appeal the Court addressed several important issues that could have ramifications or that might at least be considered in cases where issues exist relating to mental capacity, undue influence, and understanding of the trust or will documents and the nature of the estate and its assets.

  1. On appeal Gina argued as a defense that in 2005 she did not have standing to contest the 2001 and 2004 amendments pursuant to Cal. Probate Code sections 17200 and 15800 because the trust was still revocable in 2005.  The Court of Appeal noted that under sections 17200 and 15800 a beneficiary lacks standing to challenge a trust so long as the “trust is revocable and the person holding the power to revoke the trust is competent.”  The Court held that it was not persuaded by Gina’s argument, holding that since Gina alleged in 2005 that Josephine was incompetent, those allegations by Gina in 2005 took the matter outside of the terms of section 15800, and with those allegations Gina had standing in 2005 to contest the trust amendments, although at trial she still would have had the burden of proving her contest of the amendments.
  2. The Court further held that laches barred Gina from contesting the 2001 and 2004 amendments after her mother died in 2009.  In pertinent part, the Court discussed that the defense of laches requires unreasonable delay plus either acquiescence in the act about which plaintiff complains or prejudice to the defendant resulting from any delay – and that any delay is measured from the time that the plaintiff knew or should have known about the alleged claim.  In 2005 Gina had the usual rights of a trust beneficiary and beneficiary legal standing if Gina simply alleged that Josephine was incompetent, which Gina did in fact allege in 2005.  Further, “Finally, Gina’s failure to bring the action until after Josephine had passed away was necessarily prejudicial where, as here, each and every cause of action set forth in the underlying petition centered on Josephine – her mental capacity, defendant’s influence over her, and her understanding of the Fourth [2001] and Fifth [2004] Amendments and her estate.  (See Bono v. Clark (2002) 103 Cal.App.4th 1409, 1420 [the death of an important witness may constitute prejudice]; Stafford v. Ballinger (1962) 199 Cal. App.2d 289, 296 [same].”

Take away from Drake v. Pinkham, assuming that the case is not further appealed to the California Supreme Court.

  1. As always, before you file any pleading, claim, allegation or paper with any court relating to a trust, will or other document with a no contest clause or to which a no contest clause applies, you must evaluate and make sure that the filing will not trigger the no contest clause.  If such a clause is triggered, the result might be that you are disinherited.  These are complicated issues – you need to consult with an attorney on these issues.
  2. A simple allegation that the trustor is incompetent might allow or provide the trust beneficiary or potential beneficiary with legal standing and certain beneficiary rights in an otherwise revocable trust under Cal. Probate Code sections 17200, 15800, the terms of the trust, accounting and information provisions, and other statutes.  Of course, the proof of those claims must still be established by the evidence.
  3. Allegations and claims, statements, and knowledge of facts by a beneficiary or potential beneficiary, or facts that a beneficiary or potential beneficiary should know, could trigger a requirement that the beneficiary or potential beneficiary bring suit and not delay bringing suit to enforce his or her rights and entitlements, or be barred from doing so later pursuant to the defense of laches such as if the testator dies or the testator’s mental competency declines as time passes.
  4. The defense of laches, i.e., delay, and case law relating to laches now take on renewed potential importance in trust, will, conservatorship and power of attorney litigation.  For example, if a beneficiary or potential beneficiary knows of a trust or will, or a trust amendment or will codicil, that is contrary to the beneficiary’s rights or interests, and the beneficiary simply believes that the trustor or testator might have had capacity issues or might have been unduly influenced, or that testamentary document seems contrary to what the trustor or testator would have naturally done or wanted or understood about his or her assets or estate, might that beneficiary or potential beneficiary be required to file a legal action on those possible claims without delay, or be barred by laches from doing so at a later time?  I have seen trust, will, conservatorship and power of attorney situations where people have delayed taking action – under the holding in Drake v. Pinkham they now need to consider the possible effect of delay and possible laches defenses against them if they do delay in bringing a legal action.

Best to you, David Tate, Esq.

Disclaimer and Warning.  This blog post and the contents and information contained in the post are not legal advice, do not create or cause an attorney client relationship with your or anyone else, and do not relate or pertain to any person, entity or factual situation, and I do not know the facts of your situation.  The contents of this blog post are only a summary of information which could change over time.  I have not advised you about your situation, and you definitely should consult with an attorney for your particular situation.

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New FinCEN and Consumer Financial Protection Bureau Memo re Efforts to Combat Elder Financial Exploitation

At the bottom of this post you will find a link to a new Financial Crimes Enforcement Network (FinCEN) and Consumer Financial Protection Bureau memorandum about efforts to combat elder financial exploitation, which the memo identifies as the illegal or improper use of an older person’s funds, property or assets. And I have also included additional links below. As the memo notes, “Financial institutions can play a key role in detecting, responding to, and preventing EFE [Elder Financial Exploitation]. The memo also encourages collaboration between financial institutions, law enforcement and APS [Adult Protective Services]. This is a topic that I have handled in many actual cases, and about which I have given presentations and written blog posts. I have also seen a recent article discussing the rather large percentage of incidents in which physical elder abuse is not reported by medical facilities such as hospitals.

It has long been my view that the collaboration effort must also include private attorneys, for the simple reason that law enforcement and APS simply do not have the resources to handle the numbers of cases, or how long it takes to prosecute them to obtain recovery. Reporting is one thing, prosecuting the cases is an entirely different matter. Law enforcement and APS are not staffed to obtain recovery through the court system. The district attorney and attorney general are staffed to prosecute these cases through the court system, but again, the resources available are inadequate. These cases can involve complicated legal and evidentiary issues including mental capacity, undue influence, dependence, consent, fiduciary and other duties, burden of proof, etc.

In addition to the below link to the FinCEN/Financial Protection Bureau memorandum, I have also provided below a few links to some of my prior posts on this topic and elder abuse.

Best regards, David Tate, Esq., Royse Law Firm, Menlo Park office, http://rroyselaw.com/

http://files.consumerfinance.gov/f/documents/201708_cfpb-treasury-fincen_memo_elder-financial-exploitation.pdf

Elder Abusers Use The Legal System Also – Video http://wp.me/p1wbl8-jp

Elder and Dependent Adult Resources are Ridiculously Inadequate and Archaic http://wp.me/p1wbl8-cV

Elder Abuse and Protection Slides 2015 http://wp.me/p1wbl8-dm

Counties Need to Refer Elder Abuse Cases to Private Attorneys – Video http://wp.me/p1wbl8-ke

Everyday is elder abuse prevent day – cartoon video http://wp.me/p1wbl8-lE

Completed (mostly) a will contest and trust real property percentage trial on Friday – read more

I have been away from the blog for a while, preparing for a very contentious and time-consuming trial.

This past week I was in trial on a will contest action, and also on related but separate real property ownership and trust beneficiary percentage ownership claims. The witnesses and experts included my client who was the named beneficiary, the contestant(s), documents in which the decedent expressed her wishes including a police report and APS records in addition to other documents, forensic document examiners, forensic psychiatrists, and third party witnesses including a very spry 102 year old woman who was a friend of the decedent (the decedent executed the will at age 103, and passed away approximately 9 months later at age 104). Issues also involve the validity of a power of attorney that the decedent executed in June 2015 (she died one month later in July 2015), mental capacity, undue influence, elder abuse, trust and power of attorney accountings, costs and attorneys’ fees, and other issues.

As you may be aware, issues of mental capacity and undue influence are not the same for wills, powers of attorney, and trusts, variously including California Probate Code §§810, etc., and 6100.5, etc., and California Welfare and Institutions Code §15610.70, and various other statutes and case law.

The will contest was denied, and my client will receive what the decedent wished and intended.

So . . . I will be back on this blog and other networking, and also on my other blog http://auditcommitteeupdate.com.

Best to you, and thank you for following my blogs and posts. Dave Tate, San Francisco Bay Area and California.

 

Everyday is elder abuse prevention day – video cartoon – please pass it along

Here’s a different presentation approach – please do pass it along to your contacts and people who would be interested. This is an important topic that needs more discussion. Thank you. Dave Tate, Esq. (San Francisco and California)

New California Case – Gregge v. Hugill – Probate Code Section 17200 Petition Improperly Dismissed, And Policy Favors Trials And Determinations On The Issues And The Claims Alleged

On July 14, 2016, the California Court of Appeal for the Sixth District issued its decision in Gregge v. Hugill, Case No. HO40663. Viewed most simply, the Court determined that Appellant had standing to bring his petition under California Probate Code section 17200 in which he alleged lack of testamentary capacity, undue influence and elder abuse, and that Probate Code section 17202 and another beneficiary’s disclaimer did not operate to defeat or eliminate Appellant’s pecuniary interest and standing to bring his petition and for trial thereon.

But viewed in its entirety, the decision in Gregge v. Hugill affirms policies that favor a party’s entitlement to a determination on the issues and the claims alleged, arguably disfavors claim forfeiture arguments, and affirms that estate planning document, i.e., will and trust, and inheritance contest determinations and findings should be based on the decedent’s intent.

The following are six snapshots from the opinion in Gregge v. Hugill which will provide you with some of the Court’s insight (the first snapshot is only of the case caption).

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