Opinion
NOT TO BE PUBLISHED
San Francisco County Super. Ct. No. PES-04-286102
Haerle, J.
I. INTRODUCTION
Arnold S. Gridley died on May 8, 2004, leaving approximately 40 percent of his estate to his daughter Christine. Thereafter, two of Arnold’s sons, Michael and Robert, filed a petition to determine their interest in Arnold’s estate, pursuant to an “Agreement to Equalize Gifts Among Beneficiaries” that they previously executed with their sisters, Christine and Patricia. After a court trial, the probate court granted the petition and determined that Michael and Robert were each entitled to a 25 percent interest in the portion of Arnold’s estate that was left to Christine.
For clarity, we refer to members of the Gridley family by their first names.
In this consolidated appeal, Christine and Patricia (appellants) contend that numerous trial errors require a reversal of the judgment and a new trial. Appellants also contend that, even if the judgment is affirmed, the trial court abused its discretion by awarding respondents attorney fees in the amount of $626,159.75. We affirm the judgment and the post-judgment attorney fee order.
II. STATEMENT OF FACTS
A. Background: Elsie Gridley’s Estate
Arnold was pre-deceased by his wife Elsie, whose death in 1992 was the impetus for substantial litigation among her family. A summary of that litigation, including numerous prior appeals in this court, is set forth in our prior decision in Gridley v. Gridley (2008) 166 Cal.App.4th 1562 (Gridley). An abridged version of this unfortunate saga will suffice here.
Elsie’s will provided that her estate was to be divided equally among her four children, Michael, Robert, Christine and Patricia. However, Arnold claimed a right of survivorship with respect to most of Elsie’s assets. Michael, as executor of Elsie’s estate, disputed his father’s claim, invoking an agreement between Elsie and Arnold that all assets acquired during their marriage were community property. This round of litigation led to an August 1993 Settlement Agreement, executed by Arnold, Michael, Robert, Christine and Patricia. (Gridley, supra, 166 Cal.App.4th at pp. 1566-1567.)
As we explained in Gridley, the 1993 Settlement Agreement identified community property of Elsie and Arnold, “called for the establishment of the Elsie N. Gridley Irrevocable Trust (the ENGIT), and provided that Michael and Arnold would serve as co-trustees. The ENGIT would hold within it two separate share trusts, the Elsie Trust and the Arnold Trust. The Elsie Trust would hold most of Elsie’s share of the community property and would ‘provide for income for life’ to Arnold with the remainder to be distributed upon his death to the children.” (Gridley, supra, 166 Cal.App.4th at p. 1567.)
Implementing the 1993 Settlement Agreement and administering the ENGIT led to countless other disputes between family members, many of which are not relevant here. We do note, however, that the disagreements were so numerous that, in 1994, Arnold, Michael, Robert, Patricia and Christine entered into a stipulation for the appointment of the Honorable Harry Low, a retired Justice of the California Court of Appeal, First Appellate District, to serve as a temporary judge during the administration of Elsie’s probate estate. Furthermore, in 1995 Michael and Arnold agreed that Michael would serve as sole trustee of the ENGIT. (Gridley, supra, 166 Cal.App.4th at pp. 1578-1583.)
When Elsie’s probate estate was finally closed on April 23, 1996, Christine and Patricia objected that Michael should not be appointed trustee of the ENGIT because of hostility and poor communication among the family members. (Gridley, supra, 166 Cal.App.4th at p. 1570.) Michael was appointed trustee over his sisters’ objections. Both the 1993 Settlement Agreement and the ENGIT contemplated that the Elsie Trust would be distributed after Arnold’s death. (Id. at pp. 1562-1571.) Arnold died on May 8, 2004. However, Elsie’s trust estate remained open while her children litigated over their various rights and interests. (Ibid.)
In March 2006, Christine and Patricia filed a petition in Elsie’s estate case in which they alleged that Michael, Robert and others committed fraud and other wrongdoing in connection with the sale of the “Dixon Ranch, ” a piece of real property that was formerly held in Elsie’s trust. (Gridley, supra, 166 Cal.App.4th at p. 1566.) The Dixon Ranch petitioners also alleged multiple causes of action against one of the attorneys for Elsie’s trust estate, Benjamin Winslow (Winslow). (Id. at p. 1573.)
Christine and Patricia attempted to have the Dixon Ranch petition decided in the probate court. (Gridley, supra, 166 Cal.App.4th at p. 1574.) Michael and the other respondents resisted that effort, taking the position that Justice Low had exclusive jurisdiction to decide the petition. In the meantime, on March 8, 2007, Justice Low filed an order denying a motion by Christine and Patricia to disqualify Winslow as attorney for respondents in the Dixon Ranch petition (the March 2007 order). Justice Low found, among other things, that contrary to petitioners’ contentions, Winslow did not previously represent Christine and Patricia in 1993 and 1994. (Id. at pp. 1575-1576.)
In May 2007, Christine and Patricia filed an appeal from Justice Low’s March 2007 order. Thereafter, they appealed an April 2007 order in which Justice Low found that he had authority to adjudicate most of the causes of action alleged in the Dixon Ranch petition. These appeals were consolidated with each other and with a petition for writ of mandate that was filed by the respondents in the Dixon Ranch petition. That consolidated appeal was presented to this court for decision in Gridley, supra, 166 Cal.App.4th 1562. Meanwhile, Michael and Robert were pursuing their own petition in Arnold’s probate case.
B. The Present Action
1. The Agreement to Equalize Gifts Among Beneficiaries
At around the same time that Elsie’s four children executed the 1993 Settlement Agreement with their father, they executed another agreement among themselves which was entitled “Agreement to Equalize Gifts Among Beneficiaries” (the Equalization Agreement). Michael, Robert and Patricia executed the Equalization Agreement in June 1993. Christine executed the agreement on August 6, 1993.
The stated purpose of the Equalization Agreement was to facilitate a harmonious resolution of the dispute between Arnold and the “Beneficiaries” of Elsie’s estate (Michael, Robert, Christine and Patricia) regarding the probating and distribution of Elsie’s estate. In this regard, the Agreement provides: “Because of the Probate process, the efforts to reach a compromise with Arnold have not been a painless experience. Strained relationships have developed as a result of the different roles each of the Beneficiaries has played in the ‘Process, ’ but the goal of the Beneficiaries remains unchanged – we all want to maintain Family harmony and accord with Arnold and among the four Beneficiaries. To that end, we are entering into this agreement so that a compromise with Arnold can be implemented.”
The Equalization Agreement states, in part: “By this agreement each of the four Beneficiaries agrees that if they receive any property from Arnold by gift... or sale during his lifetime or by bequest or by Arnold’s exercise of his limited power of appointment during his life or upon his death, which represents an unequal distribution among the Beneficiaries, they will transfer to the other Beneficiaries the amount of such property to equalize all gifts and bequests from Arnold as if the gift had been made to all of the Beneficiaries in equal shares.”
The four Beneficiaries also agreed that any ordinary fees or compensation that any of them received for acting as trustee of the ENGIT would be divided equally among the four Beneficiaries. According to the Agreement, this provision “recognizes the fact that all four Beneficiaries were willing and able to act as a Trustee for the Trust but that the compromise agreement did not allow for that many Trustees.”
2. Michael and Robert’s Petition
As noted above, Arnold died in May 2004. Arnold’s will dated March 28, 1996, was admitted to probate on June 22, 2004. His daughter Christine and a son named Philip Wright were appointed co-administrators of Arnold’s probate estate. On July 31, 2006, Michael and Robert filed a “Petition to Determine Entitlement to Estate, ” pursuant to Probate Code section 11604. According to the allegations in the petition, Arnold was survived by his four children with Elsie, and by two other sons, Arnold Jr. and Phillip Wright. Pursuant to a provision in his will, Arnold left 50 percent of the residue of his estate to Phillip Wright, 40 percent to Christine and 10 percent to a woman named Dorothy Dietz.
By their petition, Michael and Robert sought to establish their respective rights to 25 percent of the 40 percent of the residue of Arnold’s estate that was bequeathed to Christine. They alleged, among other things, that the Equalization Agreement was part of the overall settlement that Elsie’s four children executed with their father in 1993 to facilitate the probating and distribution of Elsie’s estate, and that the purpose of the Equalization Agreement was to “equalize any gift or inheritance from Arnold Gridley, if Arnold Gridley transferred or bequeathed property unequally to any of the four children.”
On September 7, 2006, Christine opposed Michael and Robert’s petition on three grounds. First, she argued the relief petitioners’ sought could not be afforded pursuant to the Probate Code. Second, Christine claimed that Michael and Robert had materially breached the Equalization Agreement by failing to share trustee fees with their sisters. Finally, Christine argued that she signed the Equalization Agreement under duress and, therefore, it was not enforceable. Patricia filed a joinder to Christine’s Opposition in February 2007.
On August 10, 2007, Christine filed a motion to stay or continue the trial in this case on multiple grounds, including ongoing discovery disputes and availability problems. Additionally, Christine alleged that the outcome of her appeals in Gridley would directly impact the outcome of this trial. Christine argued, among other things, that if her appeal from Justice Low’s March 2007 order was successful, and she could establish that Winslow did represent her at the time the Equalization Agreement was negotiated, then she would have a “claim for indemnity and other relief which she [could] assert as a cross-complaint here.” On September 28, 2007, the superior court denied the motion for a stay, although it did continue the trial for several months.
On March 28, 2008, Christine filed her Amended Objections and Opposition to the petition. Christine alleged that the Equalization Agreement was invalid on multiple grounds including fraud, duress, undue influence, and illegality. Christine also sought affirmative relief in the form of damages for fraud and for breach of the provision requiring Michael to share trustee fees with his siblings. She also claimed a right to attorney fees and costs, pursuant to an attorney fee provision in the Equalization Agreement. In April 2008, Patricia filed a joinder to Christine’s amended objections and opposition to the petition.
3. Trial and Judgment
Pursuant to findings of fact and law set forth in a 21-page Statement of Decision, the trial court rejected all of Christine’s contentions. The court found, among other things, that Michael and Robert’s petition was an appropriate means of seeking a determination of their interests under Arnold’s will, that the Equalization Agreement was valid, and that Christine agreed to share her portion of Arnold’s estate equally with her siblings.
In reaching the conclusion that the Equalization Agreement was valid, the trial court rejected all of Christine and Patricia’s defenses including that their consent to the agreement was the result of undue influence, duress and/or fraud. One of the many theories the sisters pursued, but failed to establish at trial, was that Michael led them to believe that Elsie estate attorney Winslow was representing them and protecting their interests with respect to the negotiation and execution of the Equalization Agreement. The trial court found that Christine and Patricia could not have reasonably believed that was the case.
The trial court also rejected appellants’ request for affirmative relief in the form of damages for an alleged breach of the trustee fee sharing provision of the Equalization Agreement. The court found that those fees had already been equalized and the balances that were still owed had been acknowledged in orders that had already been filed in Elsie’s estate case.
A judgment filed September 10, 2008, requires that Christine’s portion of Arnold’s estate, if any, is to be distributed equally among Christine, Patricia, Michael and Robert.
C. Gridley
On September 23, 2008, this court filed its decision in Gridley, supra, 166 Cal.App.4th 1562. We held that Justice Low’s authority as a temporary judge in Elsie’s probate case did not authorize him to decide the Dixon Ranch petition that Christine and Patricia filed in Elsie’s estate case. Our conclusion compelled us to reverse decisions Justice Low had made in connection with the Dixon Ranch petition including the March 2007 order, which contained the finding that Winslow did not have a prior attorney-client relationship with Christine and Patricia.
Christine and Patricia used our decision in Gridley to buttress their already pending motion for a new trial in the present case. They argued that this judgment was based on the March 2007 order and that the reversal of that earlier order mandated that this judgment be reversed as well. The trial court rejected this, and other alleged claims of error, and denied appellants’ motion for new trial.
III. DISCUSSION
As reflected above, the trial court found that Michael and Robert’s petition was properly filed under Probate Code section 11604 (section 11604) and that they were entitled to a declaration of their interests in Arnold’s probate estate by virtue of the Equalization Agreement. Appellants do not challenge these findings on appeal. However, they do contend that the trial court failed to conduct a proper inquiry under section 11604.
Because appellants now concede on appeal that their brothers are entitled to a declaration of their interests pursuant to this statute, we summarily reject appellants’ separate argument that respondents failed to establish a “key element” of their breach of contract case. This argument is premised on appellants’ unsuccessful trial theory that Probate Code section 16004 did not apply and that respondents’ petition was really a civil action for breach of contract.
Section 11604 states, in relevant part:
“(a) This section applies where distribution is to be made to any of the following persons:... [¶] (2) Any person other than a beneficiary under an agreement, request, or instructions of a beneficiary or the attorney in fact of a beneficiary.
“(b) The court on its own motion, or on motion of the personal representative or other interested person..., may inquire into the circumstances surrounding the execution of, and the consideration for, the transfer, agreement, request, or instructions, and the amount of any fees, charges, or consideration paid or agreed to be paid by the beneficiary.
“(c) The court may refuse to order distribution, or may order distribution on any terms that the court deems just and equitable, if the court finds either of the following: [¶] (1) The fees, charges, or consideration paid or agreed to be paid by a beneficiary are grossly unreasonable. [¶] (2) The transfer, agreement, request, or instructions were obtained by duress, fraud, or undue influence.”
In the present case, appellants contend that the trial court failed to conduct a proper inquiry under section 11604 when it concluded that the Equalization Agreement was supported by adequate consideration. They argue that “[u]nder Probate Code section 11604, the court must accord much stricter scrutiny to the fairness of the consideration than would be the case under ordinary contract principles.” (Citing Estate of Boyd (1979) 98 Cal.App.3d 125, 131.)
In its statement of decision, the trial court found that the Equalization Agreement was supported by the following consideration: First, each party “gave up a possibility of receiving more or receiving less in the event Arnold executed a will leaving anything to any of them.” Second, the parties also received the right to share equally in trustee fees regardless of who did the work.
The trial court’s conclusion that this consideration was adequate was supported by relevant, indeed controlling, California case law. (DeMille v. Ramsey (1989) 207 Cal.App.3d 116, 122-123; Spangenberg v. Spangenberg (1912) 19 Cal.App. 439.) This authority establishes that an agreement among heirs to share equally their interests in the testator’s estate does not violate public policy and is not void for lack of consideration. (Ibid.) As to the latter point, the reciprocal benefit which might accrue to the parties to such an agreement constitutes adequate consideration. (Ibid.)
Appellants fail to articulate how or why the trial court’s analysis was improper. Indeed, they essentially ignore the statement of decision and the detailed findings contained therein. Furthermore, as with virtually every other argument in their lengthy briefs on appeal, appellants ignore our substantial evidence standard of review. Therefore, we affirm the trial court’s finding that the Equalization Agreement is supported by adequate consideration.
B. Illegality
The trial court rejected appellants’ defense that the Equalization Agreement is an illegal agreement to commit tax fraud. In this court, appellants contend the Equalization Agreement is an illegal agreement, as a matter of law.
1. Background
As noted in our factual summary, the 1993 Settlement Agreement identified the community property of Arnold and Elsie’s marriage and called for the establishment of the ENGIT which consisted of two separate share trusts, the Elsie trust and the Arnold trust. (Gridley, supra, 166 Cal.App.4th at p. 1567.)
The Arnold trust was funded with one-half of Arnold’s share of the community property. Arnold was the income beneficiary of his separate share trust and the Settlement Agreement granted him a limited power of appointment over this property, which entitled him to bequeath the property in whole or in part to any one or all of his four children with Elsie.
At trial, appellants’ theory was that the purpose of the Equalization Agreement was to vitiate Arnold’s power of appointment over the property in the Arnold trust without incurring a gift tax. They claimed that Michael drafted and negotiated the Equalization Agreement separately from the Settlement Agreement itself so that it could be concealed from the taxing authorities because, if the two agreements were considered together, they would have resulted in a completed gift and triggered a tax. Appellants developed this theory through the testimony of their expert, Laurence Dugoni, a Certified Public Accountant and an estate planning trust and probate lawyer with a claimed expertise in the area of “estate and gift taxes.”
2. The Trial Court’s Findings
The trial court rejected appellants’ illegality theory and concluded that there was “no evidence of a scheme created by Michael to evade taxes.” This conclusion was supported by numerous findings of fact which we summarize here.
Michael proposed that he and his siblings execute an agreement to equalize gifts for two reasons: (1) to “carry out Elsie’s expressed wish for equal treatment of her children, ” and (2) “to foreclose the possibility that Arnold could, as he had in the past, play his children against each other or further manipulate loyalties and relationships with monetary inducements.” Michael then drafted the Equalization Agreement with the assistance of Jim Leigh, one of the attorneys for Elsie’s probate estate.
A copy of the Equalization Agreement was provided to all of the attorneys who were involved in the 1993 settlement negotiations between Arnold and the four Gridley siblings, including Leigh and Winslow, who represented Elsie’s probate estate, Ray Greene, who represented Arnold, and Farbstein & Blackman, who participated in settlement negotiations at the request of Christine. Each of these counsel sought advice about the tax consequences of the Equalization Agreement. Leigh consulted a tax attorney, Farbstein & Blackman consulted a tax professor, and Greene consulted with three certified public accountants.
As the trial court noted in its Statement of Decision: “Michael had no background, knowledge or expertise in estate tax issues and relied on the opinions and advice of the numerous tax attorneys and accountants who were involved in drafting the [Settlement Agreement]. None of the tax attorneys or accountants expressed a concern that the [Equalization Agreement] was illegal.” Furthermore, the Equalization Agreement was disclosed to and known to all the parties and their attorneys and “none of the multiple tax experts involved in the drafting and review of these agreements identified any concern about illegality.”
3. Analysis
“[I]t is not illegal for the beneficiaries under a will to make an agreement between themselves as to how they will dispose of their respective legacies when received by them.” (Platt v. Wells Fargo Bank American Trust Co. (1963) 222 Cal.App.2d 658, 664 (Platt).) However, such an agreement will be deemed illegal and void if it was entered into with the intent to conceal its existence from the taxing authorities in order to commit tax fraud. (Ibid.; Redke v. Silvertrust (1971) 6 Cal.3d 94, 102; see also American & Nat. etc. Baseball Clubs v. Major League Baseball Players Assn., (1976) 59 Cal.App.3d 493, 499.) “ ‘Intent’ and ‘purpose’ are ordinarily questions of fact to be determined by the trial court.” (Platt, supra, 222 Cal.App.2d at p. 664.)
In the present case, the trial court’s detailed factual findings support its legal conclusion that Michael did not execute the Equalization Agreement with the intent to conceal it from the taxing authorities. Appellants ignore these findings and thereby waive the right to challenge the sufficiency of the evidence to support them. Instead, they contend that other evidence in the record proves the agreement was illegal as a matter of law.
First, appellants rely on an alleged “admission” by Michael that he knew that an equalization agreement could not be incorporated into the 1993 Settlement Agreement without creating a tax problem of some kind.
The desire to avoid a tax or obtain a tax benefit is not an illegal objective in and of itself. (Platt, supra, 222 Cal.App.2d at p. 664.) Furthermore, evidence that Michael had knowledge of a potential tax benefit does not undermine the court’s express findings regarding Michael’s intent and purpose. As the court found, Michael’s intentions were to effectuate his mother’s wish that her four children be treated equally, and to promote family harmony; they were not to commit tax fraud.
Second, appellants rely on the allegedly undisputed fact that the Equalization Agreement was neither included with Elsie Gridley’s estate tax return nor filed with the probate court “as a material component” of the 1993 Settlement Agreement.
Again, this fact does not compel the conclusion that the appellants seek. Attorney Leigh prepared the tax returns for Elsie’s probate estate and decided what documents to attach. Furthermore, Michael “had no background, knowledge or expertise in estate tax issues and relied on the advice of numerous tax attorneys and accountants who were involved in drafting the [Settlement Agreement].” Finally, Michael disclosed the Equalization Agreement to all of the parties and their attorneys. Nobody raised any question about the legality of the agreement and, apparently, nobody thought it was necessary to attach the agreement to the Settlement Agreement.
Appellants intimate that an illegal purpose must be inferred solely from the fact that the Equalization Agreement was not incorporated into the 1993 Settlement Agreement. Their theory is that the Equalization Agreement is, in actuality, a material term of the 1993 Settlement Agreement and that it was negotiated in a separate document so that its tax implications could be concealed from the government. We reject this theory. The evidence before us establishes that the Equalization Agreement and the 1993 Settlement Agreement were separate contracts. These two agreements involved different parties; Arnold was not a party to Equalization Agreement. Furthermore, the subject matter of the Equalization Agreement was also distinct as it was not limited to the assets in the ENGIT, but applied to all of Arnold’s property that was gifted, bequeathed or otherwise devised to any one of Elsie’s four children.
Finally, appellants attempt to fault the trial court for allegedly failing to apply or even understand relevant tax law principles. However, their offensive and inappropriate comments miss the mark by a long shot. Both sides presented conflicting expert testimony about the potential gift tax implications of the Equalization Agreement. The court’s conclusions regarding those potential consequences are superfluous to the judgment because this is not an Internal Revenue Proceeding and the actual tax consequences of the agreement have yet to be determined.
The dispositive issue, for purposes of deciding this illegality defense, was whether these four Gridley siblings executed the Equalization Agreement with the intent to commit tax fraud. The conclusion that they did not is supported by substantial evidence.
C. Undue Influence and Duress
The trial court rejected appellants’ defense that the Equalization Agreement is not enforceable against them because their consent was the product of undue influence and duress. Appellants now contend (1) the trial court erred by failing to apply a presumption of undue influence; and (2) the evidence establishes that, as a matter of law, Michael exerted undue influence and duress on appellants.
1. Burden of Proof
Appellants argue that the trial court erroneously imposed the burden on them to prove undue influence and duress. They contend that Michael’s fiduciary obligations to them gave rise to a presumption of undue influence and duress with respect to this transaction. (Citing Prob. Code, § 16004, subd. (c) (section 16004(c)).) They reason that Michael was their fiduciary by virtue of his roles as executor of Elsie’s probate estate, trustee of the ENGIT and attorney for these appellants.
Appellants do not dispute that they had the burden of proof with respect to their numerous other defenses. (See Evid. Code, § 500 [“Except as otherwise provided by law, a party has the burden of proof as to each fact the existence or nonexistence of which is essential to the claim for relief or defense that he is asserting.”].)
First, it appears that appellants have forfeited this theory because they did not raise it at trial. (See Brown v. Boren (1999) 74 Cal.App.4th 1303, 1316; Eisenberg et al, Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2008) [¶] 8:229, p. 8-155.) They contend otherwise in their reply brief, but the references to the trial record that they provide show only that they argued that Michael had and breached fiduciary obligations. We find no evidence that appellants ever argued that these obligations shifted the burden of proof. For example, the tentative statement of decision expressly imposed the burden of proof on appellants. Appellants filed 31 pages of objections to that tentative statement but never questioned that they had the burden of proof with respect to this defense.
Second, section 16004(c), which appellants cite for the first time on appeal, pertains to a presumption that arises in connection with a transaction between a trustee and a beneficiary when the trustee obtains an advantage from a beneficiary while the trust exists or the trustee’s influence over the beneficiary remains. The plain language of this statutory presumption does not apply here because Michael was not a trustee when the Equalization Agreement was negotiated and executed. Indeed, the ENGIT did not yet exist when the agreement was signed.
Appellants contend the section 16004 presumption should also apply to executors and point out that Michael was the executor of Elsie’s probate estate during the relevant time period. They ignore, however, the fact that Michael was also a beneficiary of that estate, along with his brother and sisters. The evidence supports the conclusion that Michael and his siblings were all acting in their capacity as beneficiaries when they executed the Equalization Agreement. The agreement benefited Michael because he was a co-beneficiary and a family member, not because he was the executor of a probate estate.
Third, appellants contend that a presumption of wrongdoing should be applied because Michael was their attorney. They dispute the trial court’s finding that Michael did not act as their attorney in connection with the negotiation, drafting and execution of the Equalization Agreement, but fail to support this challenge with any meaningful analysis. Furthermore, they refer us to a single trial exhibit which clearly does not undermine the trial court’s finding. The document is a “Notice of Claimant’s Interest In Property Owned By Decedent, ” which Michael apparently signed in his capacity as the executor of his mother’s estate. This notice, which was recorded by Winslow, identifies Michael as an attorney, but not as his sisters’ attorney.
Finally, and in any event, even if the trial court should have applied a presumption of undue influence and duress, the error was harmless because the trial court’s factual findings, which we summarize below, support the conclusion that any presumption of undue influence or duress was overcome.
2. The Trial Court’s Findings
The trial court made extensive findings of fact in support of its conclusion that appellants’ consent to the Equalization Agreement was not obtained by undue influence or duress, which we summarize here.
The court credited Patricia’s trial testimony that Michael called her six to eight times to discuss why he believed the Equalization Agreement would promote family harmony. She admitted that Michael was not abusive during these conversations. Patricia never complained to Winslow, to her father or to Robert that Michael was pressuring her to sign the agreement. Nor was Michael present when Patricia signed the agreement at her home.
The trial court found that the evidence was in conflict regarding the number of times that Michael called Christine to discuss the Equalization Agreement. Christine testified at trial that Michael called once a week between June and August of 1993 to try to persuade her to sign the agreement. Michael testified that he was rarely able to reach Christine by telephone during that two-month period. Michael’s testimony was corroborated by Christine’s sworn statement in 1996 that she had not spoken to Michael since March 1993. In any event, Christine admitted at trial that phone calls from Michael were made during the day, their conversations were relatively short, and Michael acted professionally and was not personally abusive in any way.
The trial court also found that neither appellant had any communication with Winslow during the period that the Equalization Agreement was negotiated and executed and they could not have reasonably believed that he was representing their interests with respect to this agreement. Furthermore, Christine had access to and utilized legal advice about the Equalization Agreement from both Ray Greene, who was her father’s attorney, and from the law firm of Farbstein & Blackman, who were involved in the negotiation of the 1993 Settlement Agreement.
Appellants literally ignore the trial court’s findings and thereby forfeit any contention that they are unsupported by substantial evidence. Instead, they invoke the rule that a fiduciary cannot exploit his position to obtain a benefit for himself. (Citing Rosenfeld, Meyer & Susman v. Cohen (1983) 146 Cal.App.3d 200, 213-214, overruled on other grounds in Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503.) Appellants contend that this record compels the conclusion that Michael violated this rule because he admitted at trial that he told his sisters that he would not sign the 1993 Settlement Agreement with Arnold unless they executed the Equalization Agreement.
The trial court expressly found that both Michael and Robert took the position that they would not sign the 1993 Settlement Agreement if the Equalization Agreement was not executed. However, the court also found that taking this position did not constitute duress or coercion because “Michael and Robert were within their legal rights to decline to enter into a settlement.” We agree. More to the point, though, Michael did not exploit his fiduciary power by taking this position. Michael’s role as co-beneficiary of Elsie’s estate gave him the same power that all of the beneficiaries had to execute or reject the 1993 Settlement Agreement. That power had nothing whatsoever to do with the fact that Michael was also the executor of his mother’s probate estate. Appellants do not identify any evidence that Michael misused his power as executor of Elsie’s estate.
Furthermore, appellants completely fail to substantiate their claim that the Equalization Agreement conferred a benefit on the executor and/or on the future trustee of the ENGIT. Arguably, the agreement harmed the trustee because it required that person to share trustee fees with the other parties to the agreement. At the same time, the Equalization Agreement conferred the identical benefit on each of the beneficiaries of Elsie’s probate estate. Michael did not obtain any benefit under this agreement that was not also conferred on each of his siblings.
We hold that the extensive findings of fact set forth in the statement of decision, findings that appellants fail to properly challenge on appeal, support the trial court’s conclusion that Michael did not secure his sisters’ consent to the Equalization Agreement by means of undue influence or duress.
D. Justice Low’s March 2007 Order
Appellants contend that the trial court committed reversible error by applying the doctrine of res judicata to preclude them from relitigating a finding by Justice Low in the Dixon Ranch case that Elsie estate attorney Benjamin Winslow did not have an attorney-client relationship with Christine and Patricia. They further contend the court made a second material error when it refused to grant them a new trial after this court issued its decision in Gridley, supra, 166 Cal.Appl.4th 1562, and reversed Justice Low’s March 2007 order. Finally, appellants argue that the court made a third reversible error by failing to recognize that Winslow was their attorney as a matter of law.
1. Background
As noted in our factual summary, one of the orders appealed in Gridley was Justice Low’s March 2007 order denying Christine and Patricia’s motion to disqualify Winslow from representing the respondents in the Dixon Ranch case. In that order, Justice Low found that Winslow did not have a prior attorney-client relationship with Christine and Patricia.
Prior to trial, Christine argued unsuccessfully that the trial in this case should be stayed pending resolution of the appeal in Gridley. Her theory was that, if Winslow was her attorney when she executed the Equalization Agreement, then she could file a cross-claim for indemnity against him in this case. Apparently, Christine abandoned that theory after her motion for a stay was denied.
By the first day of trial, appellants’ theory was that evidence of their alleged attorney-client relationship with Winslow was relevant because Michael used that relationship to trick them into executing the Equalization Agreement. As Christine’s counsel argued: “Mr. Winslow, who was working, who was a friend, a business companion and an attorney to Michael, worked with him, and led these two women to believe they had an attorney protecting them” when they executed the Equalization Agreement.
There were three in limine motions that potentially affected the admissibility of evidence regarding the alleged prior attorney-client relationship between Winslow and appellants. First, Michael and Robert had filed a motion to preclude Christine and Patricia from offering evidence in support of any of their defenses on the ground that those issues were or could have been raised during litigation in the Elsie estate cases. Second, the petitioners had also filed a separate motion to specifically preclude Christine and Patricia from relitigating Justice Low’s finding in the March 2007 order, that Winslow did not have an attorney-client relationship with Christine and Patricia in 1993 and 1994. Third, Christine filed a motion to exclude all evidence of the March 2007 order on the ground that it was not a final order.
These three motions overlapped to some extent, and the comments the court made during lengthy discussions with counsel can be misconstrued if taken out of context. A fair and balanced reading of the court’s comments establishes that it made the following pretrial rulings:
First, res judicata principles did not bar Christine and Patricia from attempting to prove their defenses in this case. The court reasoned that, as best it could determine, no judge in the Elsie estate cases had previously ruled “upon the validity of the equalization agreement, ” which was the primary issue before the court in this case.
Second, Justice Low’s March 2007 order was not final and did not have any res judicata effect. Therefore, the court stated: “I will take judicial notice of Judge Low’s March 2007 order. I recognize he made findings of fact. I don’t believe that that order is final. So I wouldn’t give it any res judicata effect. I know that it exists.”
Third, the parties could present evidence regarding statements and actions by Michael, Winslow and others regarding Winslow’s role in the drafting, negotiation and execution of the Equalization Agreement and the effect such words or actions had on Christine and Patricia, including their understanding as to whether Winslow was their attorney during that process.
Fourth, the specific question of whether Winslow had a prior formal attorney-client relationship with Christine and Patricia was pending before the Court of Appeal in Gridley. Therefore, that issue would not be relitigated in this case. If, during the course of the trial, the question became relevant, the court would entertain and likely grant a motion to bifurcate the proceedings and wait for the outcome of the appeal in Gridley.
The court explained: “I don’t know how critical that is to determining the validity of the equalization agreement. But I’m not going to relitigate it. I’m not going to reconsider it. I’m going to wait for the court of appeal to rule on it since that specifically is one of the items appealed.”
2. The Trial Court’s Findings
The statement of decision contains extensive factual findings regarding Winslow’s role in negotiating the Equalization Agreement, which we summarize here.
Winslow and Jim Leigh were the attorneys for Elsie’s probate estate and for Michael as executor of that estate. Winslow and Leigh pursued settlement discussions with Arnold and his attorney, Raymond Greene. In June or July 1992, Winslow and Leigh met with Christine and Patricia to explain the probate process, and informed them that they had the right to retain their own counsel. On or around March 29, 1993, Winslow and Leigh sent Christine and Patricia a letter in which they explained they could not represent the beneficiaries of Elsie’s estate without a signed conflict of interest waiver. Christine and Patricia received and understood that letter and chose not to sign it.
In April 1993, Christine contacted John Blackman, an attorney who previously represented her in an unrelated matter, and asked for his assistance. Thereafter, Blackman and his partner, John Farbstein, worked closely with Arnold’s attorney, Greene, and with Elsie estate attorney, Leigh, to draft the 1993 Settlement Agreement.
Sometime between April and June 1993, Michael raised the subject of an equalization agreement with his siblings. Michael drafted the Equalization Agreement with Leigh’s assistance. Attorneys Leigh, Winslow, Farbstein, Blackman and Greene all knew about the agreement and had copies of it. Michael had conversations with both Patricia and Christine about the agreement and why he wanted them to sign it. Neither sister contacted Winslow to complain that Michael was pressuring them to sign the agreement.
During the period that Christine was deciding whether to sign the Equalization Agreement, she had access to legal advice from Farbstein & Blackman, and also from Arnold’s attorney, Ray Greene.
In July 1993, Farbstein sent a letter to the probate court requesting a settlement conference in Elsie’s probate case and notifying the court that his law firm would appear as the attorney of record for Christine and represent her interest. Thereafter, Michael sent a copy of the Equalization Agreement to Farbstein, with a request that Christine sign it. Blackman followed up with Michael about the terms of the agreement.
On the day Christine executed the Equalization Agreement, she consulted with both Blackman and her father’s attorney, Ray Greene. She actually executed the agreement at the office of one of these two attorneys.
Consistent with these factual findings, the trial court made the following finding of law regarding Winslow’s role in negotiating the Equalization Agreement: “In his March 8, 2007 Order, Justice Low found that ‘Ben Winslow did not represent Patricia Gridley or Christine Bennett in 1993 or 1994’ and that ‘there is no attorney-client relationship between Ben Winslow and Patricia Gridley and Christine Bennett.’ Moreover, neither Christine nor Patricia could have reasonably believed that Mr. Winslow was her attorney. Patricia and Christine met with Mr. Winslow only once in June or July, 1992 and never contacted him regarding the [Settlement Agreement] or the [Equalization Agreement]. Both received and reviewed the March 29, 1993 letter from Messrs. Winslow and Leigh explaining that they could not represent the siblings without a signed conflict of interest waiver, and testified that although they understood the letter, no signed copy of the letter has ever been presented. Each was always aware of and advised that she had a right to seek her own counsel. Respondents had the means and ability to engage legal counsel of their choosing. The evidence is clear that Christine did so and that Patricia freely chose not to.”
3. Analysis
Appellants contend the trial court’s findings pertaining to Winslow and the resulting judgment must be reversed because they are based on an erroneous application of res judicata. “The doctrine of res judicata gives certain conclusive effect to a former judgment in subsequent litigation involving the same controversy.” (7 Witkin, Cal. Procedure (5th ed. 2008) Judgment § 334 at p. 938.) Appellants maintain this doctrine did not apply to the March 2007 order because that order was on appeal and not yet final at the time of the trial in the present case.
Appellants’ argument as to why res judicata does not apply in this context is a red herring because the record before us establishes that the trial court expressly refused to apply that doctrine here. As reflected in our background summary above, the trial court ruled that res judicata did not apply to litigation in the Elsie cases generally and also that Justice Low’s March 2007 order was not final and had no res judicata effect.
Appellants rely on isolated comments the trial court made at the hearing on in limine motions to the effect that it would not relitigate Justice Low’s specific factual finding that Winslow did not have a prior attorney-client relationship with Christine and Patricia because that finding was on appeal. When viewed in context, these comments clearly did not constitute a faulty application of the res judicata doctrine. Although the court was reluctant to relitigate a finding that was already on appeal, it expressly refused to adopt that finding or otherwise give it conclusive effect in this case. Rather, the court made the preliminary assessment that the specific question whether Winslow had an attorney-client relationship with appellants in 1992 and 1993 was not relevant to the pending petition, and therefore would likely not require any ruling at all. The court also acknowledged, however, that if a ruling on that specific question became necessary, it would re-visit the issue.
Appellants habitually ignore significant portions of the trial record which undermine their various claims on appeal. The following exchange between the trial court and Christine’s trial counsel, Ms. Mix, is a good example:
We agree with and affirm the trial court’s conclusion that the question whether Winslow had a formal attorney-client relationship with appellants at any time in 1992 or 1993 was not relevant in this case. The theory appellants pursued at trial was that “Mr. Winslow... who was a friend, a business companion and an attorney to Michael, worked with him, and led these two women to believe they had an attorney protecting them” when they executed the Equalization Agreement. As the trial court implicitly found, and the record of this trial confirms, appellants could fully explore their theory that Michael used Winslow to unduly influence and manipulate them without having to relitigate the distinct issue whether there was a formal attorney-client relationship between appellants and Winslow at any time in 1992 or 1993.
Appellants complain that, in the end, the trial court did what it said it would not do and gave the March 2007 order conclusive effect by incorporating it into its statement of decision. We disagree. This trial court did not incorporate the prior order into its own. Rather, consistent with its pretrial rulings, the court took notice of Justice Low’s finding and then made its own findings of fact and law regarding Winslow’s role in negotiating the Equalization Agreement, findings that were based on the evidence presented at this trial. The extensive and detailed findings set forth in the statement of decision are irrefutable evidence that the trial court did not give preclusive or conclusive effect to Justice Low’s March 2007 Order.
Appellants complain that it was simply not proper for the trial court to make a finding that Winslow did not have an attorney-client relationship with them because, at the beginning of the trial, the court expressly ruled that it would not relitigate that question and it never amended that ruling during the course of the trial.
Preliminarily, we acknowledge that the statement of decision contains potentially over-broad language that was drafted by an advocate, and not by the court itself. That language, however, is susceptible to a narrow construction and, in our view, is properly limited to the subject matter of this litigation, i.e., the Equalization Agreement. In other words, the court’s findings regarding a potential attorney-client relationship pertained only to the question whether Winslow represented or purported to represent Christine and Patricia with respect to the negotiation and execution of the Equalization Agreement.
While we are on the subject of overzealous advocacy, we deny respondents’ request that we take judicial notice of a May 20, 1993, hearsay letter that was allegedly sent to Christine by John Blackman. Respondents contend that this letter, which was not introduced into evidence at trial, “directly supports the trial judge’s ruling that [Christine] was represented by Farbstein & Blackman, and not Ben Winslow.” First, the trial court did not make such a broad or formal ruling. Second, respondents have failed to establish that this court can or should take judicial notice of this letter.
Having said this, we find that the trial court’s findings were neither unexpected nor improper. We underscore that the statement of decision contains only a single finding of law regarding the possible existence of an attorney-client relationship, i.e., that appellants could not have reasonably believed that Winslow was acting as their attorney when they executed the Equalization Agreement. As reflected in our background summary above, a finding on this issue was expressly contemplated at the outset of this trial. Indeed, this finding was a direct response to appellants’ trial theory that they could establish undue influence and duress by showing that Michael somehow misled them to believe that Winslow was protecting their legal interests. Appellants were given the opportunity to prove their theory at trial, but failed to do so.
Appellants’ argument that this judgment must be reversed because Justice Low’s March 2007 order was reversed in Gridley, supra, 166 Cal.App.4th 1562, rests on the same faulty premise we have rejected above, i.e., that the judgment in this case is somehow “based” on Justice Low’s finding that Winslow did not have an attorney-client relationship with Christine and Patricia. The judgment in this case is neither based on, nor in any way dependent on, the validity of the March 2007 order. The question before this trial court was whether the Equalization Agreement was valid and enforceable. That issue was not addressed or decided in the March 2007 order.
The March 2007 order addressed whether Winslow had a conflict of interest that prevented him from representing respondents in the Dixon Ranch petition in Elsie’s estate case. That question has not been answered by this case. Winslow, who is not a party to this action, is a named defendant in the Dixon Ranch case, where he has been charged with malpractice and breach of fiduciary duty. (See Gridley, supra, 166 Cal.App.4th 1562.) That is the forum where the parties can and should obtain a ruling as to whether Winslow ever had an attorney-client relationship with these appellants.
Appellants contend that the evidence in this record establishes that, as a matter of law, Winslow was their attorney in 1992 and 1993. First, this argument undermines appellants’ primary theory that they were prevented from offering any evidence on this issue. Second, appellants’ argument is based on an incomplete analysis of the trial evidence which contravenes our substantial evidence standard of review.
Furthermore, as explained above, appellants frame the issue too broadly by attempting to establish some legal relationship with Winslow during 1992 and 1993. The relevant subject in this case is the Equalization Agreement itself, which was conceived, at the earliest, in April 1993, and was fully executed by August 6, 1993. Here, appellants use evidence pertaining to Winslow’s role in negotiating the 1993 Settlement Agreement in the Elsie probate case to try to bootstrap a finding that Winslow represented them with regard to the Equalization Agreement. However, the distinct question of whether Winslow had an attorney-client relationship with appellants by virtue of his role in drafting, negotiating and signing the 1993 Settlement Agreement was not before this trial court. These very parties are aggressively litigating that question in the Dixon Ranch case and they had no right to shop for a better answer in this forum.
Appellants take the position that Winslow’s work on the 1993 Settlement Agreement is relevant because that agreement and the Equalization Agreement are both part of the same contract, pursuant to which Arnold and the beneficiaries of Elsie’s estate settled their dispute. This logic is unsound. Evidence that both agreements were necessary to accomplish the overall settlement does not change the fact that these two documents constitute separate contracts, each involving distinct parties and supported by separate consideration. Furthermore, treating the 1993 Settlement Agreement and the Equalization Agreement as a single contract could create res judicata problems in light of the extensive litigation over the settlement agreement that has already occurred in Elsie’s estate cases.
We hold that the trial court did not rely on the March 2007 order to reach its conclusions in this case. Nor did the court prevent appellants from offering evidence in support of their theory that Michael and Winslow led them to believe that Winslow was representing them and protecting their interests when they signed the Equalization Agreement. Furthermore, the evidence presented at trial and summarized in the statement of decision supports the trial court’s ultimate conclusions that (1) Winslow did not play an active role in negotiating the Equalization Agreement and (2) Christine and Patricia could not have reasonably believed that Winslow was protecting their interests when they negotiated and executed the Equalization Agreement.
E. Rescission
Appellants contend that the judgment must be reversed because the trial court applied the “wrong law on” rescission and laches. Respondents’ contend that the statement of decision (which they drafted) correctly states that all of Christine and Patricia’s affirmative defenses were barred on the “alternative grounds” that they (1) failed to return or offer to return the benefits they received pursuant to the Equalization agreement, and (2) waited more than 15 years before they questioned the validity of the agreement.
Neither party appears to fully understand the concept of rescission. Unfortunately, this confusion is reflected in the statement of decision. Therefore, for the sake of clarity, we will briefly address these alternative findings.
The statement of decision also contains another alternative finding which we expressly decline to affirm. The court accepted Michael and Robert’s theory that, because appellants took the position that the Equalization Agreement and the 1993 Settlement Agreement were part of the same overall settlement, their defenses were barred by a broadly-worded release provision in the Settlement Agreement.
Rescission can only be accomplished by a party to a contract. The court does not rescind contracts but only affords relief based on a party effected rescission. (Runyan v. Pacific Air Industries, Inc. (1970) 2 Cal.3d 304, 311-313; Paularena v. Superior Court (1965) 231 Cal.App.2d 906, 913.) When a party to an action seeks relief based on rescission, the court must first determine whether the attempted rescission was effectual. (Civ. Code, § 1692.) Both the grounds for rescission and the means by which parties may rescind their contact are strictly governed by statute. (Civ. Code, § 1688 et seq.)
In this case, the trial court’s “alternative” findings pertained to the procedural steps that a party who is entitled to rescission must take in order to effectuate that result. These findings were “alternative” findings only to the extent that the trial court separately found that one or more of the grounds for rescission upon which appellants purported to rely did not in fact apply to them. However, it was not accurate to say that these procedural mis-steps barred all of appellants’ defenses because not all of those defenses were grounded in rescission.
In any event, to effect a rescission a party to the contract must “promptly upon discovering the facts which entitle him to rescind, ” “(a) Give notice of rescission to the party as to whom he rescinds; and [¶] (b) Restore to the other party everything of value which he has received from him under the contract or offer to restore the same upon condition that the other party do likewise, unless the latter is unable or positively refuses to do so.” (Civ. Code, § 1691.)
Appellants contend they satisfied these procedural requirements by asserting rescission as a defense to the petition. They rely on Civil Code section 1691, subdivision (b) which states: “When notice of rescission has not otherwise been given or an offer to restore the benefits received under the contract has not otherwise been made, the service of a pleading in an action or proceeding that seeks relief based on rescission shall be deemed to be such notice or offer or both.”
We are not at all convinced that this statute applies. The relevant pleading is Christine’s Amended Opposition to the Petition, which she filed in March 2008. In that pleading, most of Christine’s defenses were based on theories that the Equalization Agreement was void or voidable. At best, Christine alleged that Michael and Robert had committed a material breach which gave rise to a right of rescission. However, Christine did not actually allege that the agreement was rescinded or seek any affirmative relief based on rescission. Rather, she sought damages for breach of contract and attorney fees pursuant to the terms of the Equalization Agreement itself. Rescission and an action for breach of contract are alternative remedies, the former being based on a disaffirmance of the contract and the later on its affirmance. Therefore, an election of one of these alternative remedies bars recovery under the other. (See Akin v. Certain Underwriters at Llloyd’s London (2006) 140 Cal.App.4th 291, 296.)
Even if we construe the Amended Opposition as satisfying the procedural requirements of notice and offer to restore benefits, the trial court also found that appellants’ unreasonable delay barred them from rescinding the Equalization Agreement. Contrary to appellants’ arguments on appeal, delay resulting in substantial prejudice (i.e., laches) bars relief based on rescission. (Civ. Code, § 1693; Saret-Cook v. Gilbert, Kelly, Crowley & Jennett (1999) 74 Cal.App.4th 1211, 1226.)
Appellants contend that this issue was not properly before the court because respondents failed to plead laches as an “affirmative defense.” First, to the extent that appellants pleaded, or at least attempted to plead, rescission as an affirmative defense, they put the issue of unreasonable delay before the trial court. Second, and in any event, respondents were the petitioners and, therefore, had no obligation to plead affirmative defenses. (See General Credit Corp. v. Pichel (1975) 44 Cal.App.3d 844, 850.)
The trial court made extensive findings to support its conclusion that appellants’ 14-year delay in seeking rescission was unexplained and unreasonable. Appellants’ only response to these findings is that there is “no evidence” that they waited over 14 years to raise a defense of illegality. Appellants maintain they only recently discovered the facts that gave rise to this defense. However, illegality was not even arguably one of the grounds upon which appellants sought relief based on rescission. Indeed, in their written “Closing Argument, ” appellants expressly stated that, if the court found that the Equalization Agreement was part of an illegal scheme to avoid taxes, the agreement is “void and unenforceable, ” and there is no right to rescission.
The trial court also expressly found that an untimely rescission of the Equalization Agreement would substantially prejudice Michael and Robert because, among other things, it would “unravel” the Settlement Agreement, the ENGIT, and the numerous allocations, payments and distributions that were made in accordance with the terms of the agreement throughout the administration of Elsie’s trust estate. Appellants use this finding to accuse the trial court of fundamentally misunderstanding this entire proceeding by erroneously treating the Equalization Agreement and the Settlement Agreement as if they are the same contract. They maintain that they have “never” challenged the Settlement Agreement, the ENGIT or the trust distributions and claim that the Equalization Agreement can be rescinded without affecting any of the other trust issues.
Again, we caution appellants’ counsel against making disrespectful remarks about the trial court. The record before us indicates that the court did an admirable job of managing a case in which it was inundated with irrelevant theories and evidence presented to it by overzealous counsel who did not always follow proper procedure.
We accept appellants’ belated concession that the Equalization Agreement is a separate and independent contract, the validity of which does not depend on the validity of the 1993 Settlement Agreement. Nevertheless, undisputed evidence establishes that the litigation between Arnold and the Gridley children over Elsie’s assets would not have been resolved in 1993 if not for the Equalization Agreement and the benefits that this agreement bestowed on all of the beneficiaries of Elsie’s estate. Throughout the proceedings in the Elsie cases, the Gridley siblings acted in reliance on the promises they made to each other by executing the Equalization Agreement. Therefore, an untimely rescission of the Equalization Agreement would unquestionably unfairly prejudice three of the four beneficiaries of Elsie’s estate (Michael, Robert and Patricia) all of whom took the same risk as Christine by signing the Equalization Agreement, and all of whom are entitled to the benefit of their bargain.
F. Breach of Contract Issues
Appellants contend their rights to due process and a fair trial were violated because the trial court bifurcated this case, then refused to hear the second half of the case, and then made rulings on matters that were not properly before it.
1. Background
a. In limine Motions
On the first day of trial, before argument on in limine motions, the court made two preliminary points which applied to all of its in limine rulings. First, the court ruled that “[a]ny ruling on a motion in limine is a tentative ruling, a preliminary ruling. Things are subject to change throughout the course of a trial.” Second, the court intended to keep the focus of this trial on the issues that were properly raised by the petition: “What’s become very clear to me is that this piece of litigation and those that have come before or are currently pending take on lives of their own, so to speak, and I do want to keep a very narrow focus as to the issues that are presented to this Court at this time.”
As discussed earlier in this opinion, the first motion the court heard was Michael and Robert’s motion to exclude evidence of Christine and Patricia’s affirmative defenses on the ground that all of them were or could have been raised during litigation among these parties in the Elsie cases. The parties’ argument over this motion consumed 35 pages of trial transcript. To support their opposing positions, both sides relied on documents, pleadings and orders that spanned the 15-year history of litigation in the Elsie cases.
In response to these arguments, the trial court reiterated its concern about the manner in which the parties were attempting to litigate this case. It stated that Requests for Judicial Notice filed by each side included documents that either (1) were not subject to judicial notice or (2) were subject to limited notice in that the court could only take notice of the existence of the document. The court stated that it had not read these particular documents because, as the trier of fact, it wanted to maintain a clear delineation between evidence presented in this case and evidence that had been presented in other cases.
The court stated that the case before it was much narrower than the parties appeared to believe and it offered this caution: “I am not going to go back and relitigate everything. And that enures to both sides’ detriment. Because at least with regard to this motion, and I’m only ruling on the motions presented before me. [¶] I don’t think any of the judges in the prior litigation ruled upon the validity of the equalization agreement. And I consider that to be the issue that is before this Court. [¶] I’m less concerned with breaches of the equalization agreement. I think that is going to come once I know if this agreement is valid or not.” The court thus denied the motion in limine to exclude evidence relating to the affirmative defenses. The court reiterated that its ruling was preliminary and that evidentiary rulings would be made as they arose during the trial.
In response to this ruling, Michael’s attorney pointed out that he had several hours of testimony that related solely to the issue of breach and he questioned whether he should wait until a later point in the trial to offer that evidence. The court suggested that “we can perhaps discuss how we want to proceed as we go along.” It also observed that, because this was a court trial, it had “flexibility” in hearing evidence that might not be appropriate in a jury trial.
b. Trial Evidence Regarding Sharing of Trustee Fees
Michael, who was the first witness at trial, testified about the creation and execution of the Equalization Agreement, including the provision that required a sharing of trustee fees. Michael explained that he conceived of the fee-sharing provision as a way to ensure that all the siblings would receive disbursements from the trust during their father’s lifetime. Michael also testified that, after the ENGIT was finally funded, trustee fees were shared with his siblings.
During cross-examination, Christine’s counsel questioned Michael about these payments and elicited testimony that approximately $820,000 had been allocated to each sibling pursuant to the fee sharing provision in the Equalization Agreement. Michael testified that, although these distributions had been confirmed by a court order in the Elsie trust case, full payment had not been made because of lack of trust funds. Michael also testified that, in 2004 Justice Low filed an order approving several accountings in the Elsie trust case and that an attachment to one of the accountings itemized the outstanding trustee fees owed to each of the siblings.
Winslow, who was the attorney for Elsie’s trust estate, also testified at trial that trustee fees in that case were shared and paid to the four Gridley siblings. Testimony by Christine and Patricia further confirmed that Michael had made payments to them pursuant to the fee sharing provision of the Equalization Agreement. Both sisters admitted they had received payments from Michael for their share of trustee fees which totaled at least $50,000.
c. The Trial Court’s Findings
The trial court made the following findings of fact regarding the sharing of trustee fees: “[B]etween 1993 and 2004, each of the four Gridley siblings received over $800,000 in benefits pursuant to court-approved distributions as a result of signing the [Equalization Agreement]. Trustee fees have been equalized and the balances still owed are addressed in prior and binding court orders. In 2004 respondents stipulated to the sixth ENGIT accounting order which set forth the amount of trustee fees owed to them as of the date of death of Arnold Gridley.”
The court also made the following ruling in its statement of decision: “Further proceedings as to the trustee fees question are unnecessary because they have been raised and resolved in proceedings before Justice Low. The fees have been equalized and the balances still owed have been acknowledged by Justice Low in his 2004 Order on the 6th Accounting to which respondents stipulated.”
2. Bifurcation
Appellants contend they were denied due process because the trial court bifurcated the trial and then refused to hear the second half of this case.
The record does not support appellants’ premise that the court formally bifurcated this case. Rather, during the in limine proceeding, the court provided the parties with a preliminary assessment of the material issues. The court opined that the primary issues pertained to the validity of the Equalization Agreement, the secondary issues pertained to alleged breaches of that agreement, and numerous other issues relating to proceedings in the Elsie cases were not relevant at all.
At trial counsel’s suggestion, the court did indicate its willingness to hear evidence pertaining to validity first, with the understanding that any party could recall a witness to address breach issues, should that be necessary. As best we can determine, there was never a need to re-call any witness. Indeed, appellants do not even argue they ever attempted to re-call a witness.
Instead, appellants complain that the court proceeded to make findings “without giving Appellants an opportunity to present evidence of contract interpretation, breach of contract, performance, or related issues.” The only issue that the trial court identified as secondary to the validity issues was whether Michael breached his obligation under the Equalization Agreement to share trustee fees with his siblings. As reflected in our summary above, Michael, Winslow, Christine and Patricia were all questioned about that.
We reject appellants’ efforts to inflate the number and importance of the single issue that the trial court identified as secondary, i.e., whether Michael breached the trustee fee sharing provision of the Agreement. Their contention that the court excluded evidence of “contract interpretation” is completely unsupported. Further, “breach of contract” and “performance” are the same issue in this case, and no “related issues” have ever been identified for us.
Appellants argue that “[d]uring the trial itself, the court referred to this bifurcation and refused to hear any matters concerning performance or breach by Respondents.” However, the record citations they provide in support of this argument stretch our notion of reasonable advocacy.
The first court ruling about which appellants complain had nothing whatsoever to do with bifurcation or with the breach of contract defense. While Michael was being cross-examined about the tax consequences of the 1993 Settlement Agreement, Christine’s counsel asked if Michael would be responsible for paying any “gift taxes that are assessed.” The court sustained an objection that this question was speculative. Counsel began to argue the point, and the court responded that it did not “see [a] link... between... tax obligations and the validity of the equalization agreement.” The court also stated that it was not comfortable delving that far into Elsie estate matters that were not relevant to this case. When counsel asked for additional clarification the court stated: “I’m concerned with the validity of the equalization agreement. I think we set that as a parameter for this part of the trial yesterday.” The court repeated that it did not understand the relevance of the inquiry regarding gift and estate taxes in Elsie’s probate case. Counsel responded that expert evidence would establish the connection.
Appellants blatantly mischaracterize the court’s ruling as a refusal to hear evidence regarding the breach of contract defense. The only actual ruling the court made was to sustain an objection to a speculative question. Furthermore, the exchange with counsel about the relevancy of the elicited testimony pertained directly to Christine’s illegality defense. It had nothing whatsoever to do with the alleged breach of the trustee fee sharing provision of the Equalization Agreement.
A few minutes after this exchange occurred, the court made another ruling about which appellants now complain. At the conclusion of his cross-examination of Michael, Christine’s counsel asked the court to confirm that he would have a right to reexamine Michael “depending on your ruling for this portion of the proceeding.” The court confirmed that counsel would have that right if he could make an offer of proof that additional testimony would not be cumulative. Counsel responded that the anticipated testimony would not be cumulative because it would pertain to “performance issues” that had not yet been discussed. The court concurred that “[t]he performance issues right now, I don’t consider to be before the Court with regard to the validity of the equalization agreement.” Again, appellants mischaracterize the court’s comment as a refusal to hear testimony. It was counsel, not the court, who elected to postpone questioning Michael about the alleged breach of the Equalization Agreement.
While reviewing this portion of the record, we discovered another ruling that appellants overlook. Christine’s counsel also questioned Michael about the distributions that he made from the Elsie trust pursuant to the fee sharing provision of the Equalization Agreement. When counsel asked Michael what fees he paid himself, the following exchange occurred:
“[Michael’s Counsel]: Your Honor, may I have a continuing objection on in limine rulings if we go into details of who got what. That’s the distribution. I make the same objection.
“THE COURT: I’ll note it for the record.
“[Christine’s Counsel]: Your Honor, just so I understand, I’m not clear what the ruling was. Maybe you can refresh my recollection.
“THE COURT: Not at this time. Just proceed.”
This ruling indicates to us that the court was quite willing to hear testimony about the trustee fees issue during the trial itself.
In any event, appellants’ entire argument rests on its unproven premise that the trial court was required to conduct a full separate trial on the breach issue before it could rule on that matter. Appellants offer neither reasoned analysis nor relevant authority to support this premise.
The trial court had wide discretion to manage this trial. (Code Civ. Proc., § 128, subd. (a); Evid. Code, § 320; see, e.g., Sole Energy Co. v. Petrominerals Corp. (2005) 128 Cal.App.4th 187.) Clearly, that was no simple task. By the first day of trial the court had already been inundated with irrelevant material and overzealous advocacy. It made a preliminary non-binding assessment of the primary, secondary and irrelevant issues. Once the primary issues were resolved, the court had sufficient information about the alleged breach to realize that it did not need to hear additional testimony on that issue. This course of events did not deprive appellants of a fair trial.
3. The Trial Court’s Ruling
As reflected above, the court did not make a final determination as to whether Michael breached the trustee fee sharing provision of the Equalization Agreement. Instead, it found that (1) some fees had been shared and distributed to the siblings, and (2) the propriety of those allocations was reviewed by the probate court in the Elsie trust estate case. Under these circumstances, the court concluded that additional proceedings on the “trustee fees question” were unnecessary.
Appellants contend this ruling was error because the trial court relied on evidence that had not been properly introduced at trial. The statement of decision references the following facts: (1) “In 2004 [appellants] stipulated to the sixth ENGIT accounting order which set forth the amount of trustee fees owed to them as of the date of death of Arnold Gridley”; and (2) “The fees have been equalized and the balances still owed have been acknowledged by Justice Low in his 2004 Order on the 6th Accounting to which respondents stipulated.” Appellants do not dispute these facts are true, but complain that the 2004 stipulation, the sixth ENGIT accounting and Justice Low’s 2004 Order approving that accounting were not introduced into evidence at trial.
All three of these documents were designated by the parties as joint trial exhibits. However, respondents do not dispute appellants’ contention that these documents were not formally admitted into evidence at trial. They do argue that this evidence was, nevertheless, properly before the trial court. We agree.
Both the sixth ENGIT trust accounting and the order approving that accounting pursuant to a stipulation among these parties were filed with the court as part of Michael and Robert’s Request for Judicial Notice. Appellants complain that the trial court could not have properly taken notice of these documents without first giving them the opportunity to address the propriety of taking such notice. (Citing Evid. Code, § 455, subd. (a).) But the record shows that appellants had and took that opportunity by filing objections to this Request for Judicial Notice. Notably, however, they did not object to the court taking notice of either of these two documents.
Appellants also contend that the trial court actually refused to take judicial notice of these documents and, indeed, refused to read them. We reject this contention which is based on a very strained interpretation of the record. Appellants improperly combine isolated comments that the trial court made during pretrial proceedings to manufacture a blanket denial of the parties’ requests for judicial notice. As discussed above, during the in limine proceedings, the court advised both parties that their voluminous requests for judicial notice contained some documents that either (1) were not subject to notice at all or (2) were subject to limited notice in that the court could only take notice of the existence of the document. The court did not expressly nor implicitly identify the sixth ENGIT accounting or the 2004 order approving that account as falling into either of these categories.
We also note that, at least once during the trial itself, the court advised the parties that it could “take judicial notice of a court finding if it was duly filed in the court’s file.”
Appellants point out that Michael and Robert did not request judicial notice of the 2004 stipulation, pursuant to which the probate court approved the sixth ENGIT accounting. They ignore, however, the fact that the stipulation was filed in the trial court as an attachment to a declaration by Christine’s trial counsel along with a great deal of other evidence which only reinforces our conclusion that the sharing and payment of trustee fees is an ongoing issue in the accounting proceedings in Elsie’s estate case.
Finally, and in any event, even if the documents themselves were not in evidence, Michael testified about them at trial. As noted above, Michael testified that he made distributions of trustee fees to his siblings and that these distributions were confirmed by court order. According to Michael’s testimony, in 2004 Justice Low filed an order approving several accountings in the Elsie trust case and an attachment to one of the accountings itemized the outstanding trustee fees owed to each of the siblings.
Alternatively, appellants contend that, even if evidence of these documents was before the trial court, it committed reversible error by giving res judicata effect to the accounting proceedings in the Elsie estate cases. They contend that doctrine did not apply because the question whether Michael performed his obligations under the Equalization Agreement was never raised or litigated in the accounting proceedings or any other proceeding in the Elsie case. Respondents counter that appellants are “barred by res judicata from claiming in this action that they are owed trustee fees different from that set forth in the stipulated order approving the sixth accounting.” They advocate for a broad construction of the approval that accompanied the accounting orders in Elsie’s case and maintain that all of those orders are now final.
Both parties misconstrue the trial court’s ruling. The court did not apply the res judicata doctrine. Rather, it correctly observed that the division of trustee fees pursuant to the Equalization Agreement was already the subject of a court proceeding in the Elsie trust estate case. Once this fact became apparent to the trial court, it concluded that it would not be proper to allow the parties to litigate the breach of contract defense in this case as well. The relevant law supporting this conclusion pertains to priority of jurisdiction, not res judicata. (See Williams v. Superior Court (1939) 14 Cal.2d 656, 662 [“where a proceeding has been duly assigned for hearing and determination to one department of the superior court... and the proceeding so assigned has not been finally disposed of therein or legally removed therefrom, it is beyond the jurisdictional authority of another department of the same court to interfere with the exercise of the power of the department to which the proceeding has been so assigned.”]; see also Ford v. Superior Court (1986) 188 Cal.App.3d 737, 741-742; People v. Madrigal (1995) 37 Cal.App.4th 791, 795; 2 Witkin, Cal. Procedure (5th ed. 2008) Courts, § 229, pp. 313-317.)
We are very concerned by these parties’ repeated efforts to use this litigation to obtain some tactical advantage in the ongoing Dixon Ranch proceeding in the Elsie estate case. Therefore, we make the following points for the benefit of any court that may have to address this matter in the future. First, this judgment does not contain any substantive ruling regarding appellants’ claim that Michael breached the fee sharing provision of the Equalization Agreement. To the extent appellants attempted to assert breach as a ground for rescission, the court’s ruling that rescission was unavailable made it unnecessary to decide whether a breach actually occurred. To the extent appellants sought damages for breach of the fee sharing provision, this trial court properly found that this issue had already been raised in the Elsie trust case and that it needs to be resolved in that forum, not this one.
The parties also disagree as to the impact of our decision in Gridley, supra, 166 Cal.App.4th 1562. Since the accounting orders, including the order approving the Sixth Accounting were decided by Justice Low, appellants contend that none are valid. Respondents point out, however, that the validity of the accounting orders was not at issue in Gridley.
G. Evidentiary Rulings
1. Winslow’s Trial Testimony
Appellants contend that the trial court denied them due process and committed reversible error by permitting Winslow to testify at trial.
a. Background
Appellants filed an in limine motion to exclude evidence not produced in discovery. Specifically, appellants sought to exclude (1) all documentary evidence that Michael and Robert failed to produce during discovery and (2) any testimony by Winslow or Leigh on the ground that neither of these Elsie Estate attorneys had been deposed. With regard to the second part of this motion, appellants argued “James Leigh relocated to Nevada and after agreeing to be deposed, subsequently repudiated his agreement. Similarly, Benjamin Winslow evaded the deposition subpoena and despite informal agreements by Michael’s counsel to produce Mr. Winslow, no deposition was possible.”
The trial court granted appellants’ motion as to “any documentary evidence that might not have been produced... upon proper requests, ” but denied the motion as to testimony by Winslow or Leigh. The court found that Winslow and Leigh could testify at trial because (1) both men appeared on Michael and Robert’s witness list, and (2) appellants failed to establish that they were wrongfully precluded from deposing these witnesses. Michael and Robert objected that the deposition notice that Christine served on Winslow was defective and Christine failed to pursue the matter by filing a motion to compel. Furthermore, the court found, Christine and Patricia failed to properly subpoena Leigh who was a resident of another state.
Appellants also filed an in limine motion to exclude evidence offered in support of Michael’s advice of counsel theory on the ground that Michael failed to waive the attorney-client privilege. The trial court made a tentative ruling that this motion would be granted unless and until evidence was presented that the attorney-client privilege had been waived. As the court explained, “you’ve got to waive the attorney client privilege or you can’t avail yourselves of the defense.”
At trial, Christine’s counsel attempted to prevent Winslow from testifying on the grounds that Michael and Robert (1) never waived their attorney-client privilege with him and (2) used that privilege to withhold relevant documents in Winslow’s files. After an extensive discussion, the court obtained an express clarification from Michael’s attorney that the privilege with Winslow was “fully” waived. Christine’s counsel complained that this waiver was inadequate because it did not change the fact that the privilege was previously used to withhold Winslow’s files during discovery. However, Winslow confirmed for the court that all of his files had been produced. The court accepted Winslow’s representation, subject to cross-examination that might show otherwise, and allowed Winslow to testify. Thereafter, appellants’ trial counsel never moved to strike any of Winslow’s testimony or documentary evidence introduced through him on the ground that the evidence had previously been withheld from them.
b. Analysis
Appellants now contend that the trial court committed prejudicial error by denying their motion in limine. In fact, though, the court did not deny that motion. It ruled that evidence that had been wrongfully withheld during discovery was not admissible. Appellants do not now identify any evidence that was admitted in contravention of that ruling.
Appellants also contend that the court committed reversible error by permitting Winslow to testify at trial. However, they again fail to identify any flaw in the court’s actual rulings on this issue. Appellants’ in-limine argument that Winslow was precluded from testifying because he was not produced for deposition was unsound. Winslow did not appear at that deposition because the subpoena was defective. There is no evidence nor any contention that appellants attempted to remedy that defect or moved to compel Winslow’s appearance. Furthermore, before the court permitted Winslow to testify at trial, it established that (1) Michael and Robert fully waived their attorney-client privilege with him, and (2) all of Winslow’s relevant files had been produced to appellants prior to trial.
2. Leigh’s Absence from Trial
Appellants contend that the trial court abused its discretion by failing to “apply any adverse presumption” from the fact that Leigh did not testify at trial. They argue that respondents’ failure to produce Leigh or Leigh’s files gave rise to a presumption that “this evidence would have supported Appellants.”
Appellants rely on Evidence Code section 412, which states: “If weaker and less satisfactory evidence is offered when it was within the power of the party to produce stronger and more satisfactory evidence, the evidence offered should be viewed with distrust.” However, they cite no evidence which supports their assumption that Leigh’s testimony would have been “stronger or more satisfactory” evidence of some relevant fact. Nor do they establish that it was within Michael’s power to compel Leigh to testify at trial.
3. Blackman’s Absence from Trial
Appellants contend that the trial court erred by precluding John Blackman from testifying at trial.
a. Background
As discussed earlier, Blackman was one of the attorneys with whom Christine consulted prior to executing the Equalization Agreement. Although it is not entirely clear, it also appears that Blackman acted, or believed he acted, as a mediator for the parties with respect to the 1993 settlement in the Elsie litigation.
The court made a preliminary ruling that it would exclude evidence pertaining to actions taken by Farbstein & Blackman, which (a) had been the subject of a proper discovery request but (b) had not been produced prior to trial. The court also made a tentative ruling that it would likely exclude evidence pertaining to the mediation that Blackman conducted in Elsie’s case, but that it would not preclude Christine and Patricia from introducing evidence unrelated to the mediation to support their duress defense.
Later, during trial, Michael and Robert moved to exclude testimony by Blackman. The court made two observations. First, Blackman continued to assert the mediation privilege, and it did not appear that Blackman had any relevant information to offer that was not covered by that privilege. Second, Christine herself had asserted the mediation privilege and did not waive that privilege until three days before the discovery cut-off, and thereby avoided having to produce any documents that would have afforded Michael and Robert a meaningful opportunity to cross-examine Blackman.
Ultimately, the trial court ruled that, unless Blackman had something to say that did not fall within the purview of the mediation privilege, and that did not pertain to documents that Christine had withheld in reliance on that privilege, he would not be permitted to testify. Thereafter, Blackman was not called as a witness at trial.
b. Analysis
Appellants contend that the trial court erroneously precluded Blackman from testifying on any subject at trial solely because he previously objected to a business records subpoena on the ground of the mediator privilege. Our summary of the court’s rulings establishes that the court did no such thing. Appellants do not provide us with any reason to question the trial court’s actual rulings on this matter. Clearly, there was no abuse of discretion.
4. Appellants’ Expert, Joseph Stemach
Appellants contend the trial court committed reversible error by precluding them from calling Joseph Stemach to testify at trial as an expert regarding the tax consequence of the Equalization Agreement.
a. Background
In 1992 and 1993, Elsie estate attorney James Leigh consulted with an attorney named Donald Feurzeig about the tax consequences of the 1993 Settlement Agreement in the Elsie probate case. At the time of trial, Feurzeig was a partner at Feurzeig, Mark & Chavin, LLP. Before that law firm was formed, Feurzeig was employed by Titchell, Maltzman, Mark & Ohleyer.
In this case, Christine retained Joseph Stemach as an expert witness and disclosed that she intended to call him to testify at trial on subjects including Internal Revenue Service policies and procedures, and the tax implications of the Equalization Agreement and the 1993 Settlement Agreement. At the time of trial, Stemach was employed as “Of Counsel” at Feurzeig, Mark & Chavin, LLP. Before that law firm was formed, Stemach worked with Feurzeig at Titchell, Maltzman, Mark & Ohleyer.
Michael and Robert filed an in limine motion to exclude expert testimony by Stemach. The trial court granted that motion. It reasoned that Feurzeig would be disqualified from representing appellants in this case by virtue of his prior direct involvement in the negotiation of the 1993 settlement and the legal advice that he provided to Michael by virtue of his consultation with Leigh. Furthermore, Feurzeig’s disqualification was imputed to Stemach “by way of Stemach’s of counsel status.” As the court explained: “There’s just absolutely no evidence presented that the Feurzeig firm in any way attempted to employ any kind of ethical screen here. And I’m not even sure that if there were such evidence, that it would be appropriately considered under the facts of this case. So I think that he is vicariously disqualified from testifying in this case.”
b. Analysis
On appeal, the parties continue to analyze this issue as a question of attorney disqualification. To the extent this approach is sound, appellants have failed to establish any abuse of discretion. (See People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1143-1144.)
In any event, as a purely evidentiary matter, appellants fail to establish that the trial court abused its discretion. The record shows that appellants presented expert testimony regarding the tax consequences of treating the Equalization Agreement as part of the 1993 Settlement through their expert witness, attorney Laurence Dugoni. Appellants do not establish nor even argue that Stemach’s testimony would have differed from Dugoni’s testimony in any material way. The trial court did not abuse its discretion by excluding redundant testimony by an attorney who potentially had a conflict of interest.
5. The Motion to Reopen
On May 20, 2008, the same day the parties filed their proposed statements of decision, appellants filed a motion to reopen their case-in-chief. They argued that a letter issued by the Internal Revenue Service (IRS) on May 14, 2008, constituted “new evidence” which proved that the Equalization Agreement was an illegal agreement to evade taxes.
The copy of the IRS letter that appellants wanted to introduce into evidence was redacted by appellants’ counsel, purportedly to exclude irrelevant and privileged information. The letter was described by its author as a “summary of the issues” in Arnold’s probate estate case, based on the information that had been provided to the IRS. With regard to one such issue, the letter stated: “It is our position that in 1994, Arnold Gridley made a gift at the time he transferred his community property to the Elsie N. Gridley Irrevocable Trust [ENGIT) pursuant to IRC section 2511. Alternatively, it is our position that all of the properties transferred to the Irrevocable Trust and/or proceeds from the sale of these properties must be included in the Estate of Arnold Gridley pursuant to IRC section 2033.”
The trial court denied appellants’ motion to reopen their case to introduce evidence of this letter. The court found, among other things, that the letter was hearsay and was not relevant. The court rejected appellants’ theory that the letter established that a gift tax is actually owed because of the Equalization Agreement, noting, among other things, that the letter did not even refer to the Equalization Agreement and that the IRS matter needed to be played out in tax court.
Appellants contend the trial court abused its discretion by denying their motion to reopen. However, they fail to address the trial court’s findings, including that the IRS letter was inadmissible hearsay and that it was not a final determination as to whether a gift tax was owed. Nor do they explain how this letter would have had any effect on the trial court’s conclusion that the Equalization Agreement was neither conceived nor executed by Michael as part of an illegal plan. Therefore, appellants fail to establish that the court abused its discretion.
We agree with the trial court that evidence of current negotiations between the IRS and the representatives of Arnold’s probate estate were not sufficiently relevant to the illegality defense to warrant reopening this case. For the same reason, we deny respondents’ request that this court take judicial notice of a “Tax Court Petition” that was allegedly recently filed on behalf of Arnold’s estate.
H. Attorney Fees
As noted in our introduction, appellants have also appealed the post-judgment attorney fee order.
1. Background
Michael and Robert filed a motion to recover attorney fees as the prevailing party pursuant to an attorney fee provision in the Equalization Agreement. They requested an award of $ 655, 336.75.
The trial court evaluated the fee request pursuant to the “lodestar method” and awarded Michael and Robert fees in the amount of $ 626, 159.75. The court’s January 26, 2009, attorney fee order includes numerous findings that the court made in response to Christine and Patricia’s multiple objections to the fee request.
First, the court rejected appellants’ contention that the fee request was too high because this was a “simple” case. The court found that the matter could have been simple but appellants “were responsible for unreasonably escalating the matter into something it did not need to become.” The court noted, among other things, that appellants failed to acknowledge the complexity of their defenses and discounted the effort required to defend against their “late-added claims of civil, and potentially criminal, fraud and tax evasion.”
Second, the court rejected the contention that Robert and Michael should have retained less expensive probate attorneys to represent them, finding that the “decision to retain experienced litigation counsel was both necessary and reasonable.” By the same token, the hourly rates of attorneys who participated in this lengthy litigation were not unreasonably high simply because this was a probate case. Indeed, Christine and Patricia’s “unfocused, acrasial presentation of ever-expanding, cobbled-together theories” made this a more complex and expensive case than it needed to be.
Third, Michael and Robert did not utilize too many attorneys. Christine and Patricia had a comparable number of attorneys who represented them. Further, Christine and Patricia cannot ignore their role in generating the extensive and expansive pretrial proceedings which required the “expenditure of significant attorney time.” The trial court reviewed the relevant billing records, and found that the attorneys who represented Michael and Robert effectively and efficiently managed this case and that their work did not “result in duplicative efforts by multiple attorneys.”
Fourth, the accusation that Robert’s attorney, Ben Davidian, contributed nothing to these proceedings was patently erroneous. The court observed Davidian and Michael’s trial attorney, James Wagstaffe, working together throughout the trial. Further, Davidian’s decision to “truncate his focused witness examinations” did not diminish his contribution or the effectiveness of his representation.
Fifth, Michael and Robert’s decision to retain separate counsel was not improper or unreasonable. Christine and Patricia did the same thing and the potential for a conflict of interest was much higher among the brothers than the sisters in the case. Furthermore, in light of the serious fraud claims, Robert needed independent counsel.
Sixth, the number of hours billed and the hourly rates of Christine and Patricia’s counsel was only one factor to be considered and was not dispositive of the reasonableness of the fee request.
Consistent with these findings, the trial court separately approved the following components of the fee request, finding that each was reasonable under the circumstances:
(1) $53,374.75, for legal services provided by attorney Nelson Wild, for 164.23 hours of work at billing rate of $325 per hour.
(2) $68,100 for legal services provided by attorney Ben Davidian, for 170.25 hours of work at $400 per hour.
(3) $160,578 for services provided by attorney James Wagstaffe, for 324.4 hours of work at $495 per hour.
(4) $170,970 for services provided by attorney Keith Fong for 569.9 hours of work at a billing rate of $300 per hour.
(5) $153,737 for services provided by attorney Holly Hogan, for 654.2 hours of work at a billing rate of $235 per hour.
The court also awarded an additional $19,400 for fees incurred in connection with the attorney fee motion. However, the court exercised its discretion to decline to award fees for work performed on the case by two additional attorneys and a paralegal. Furthermore, Michael and Robert did not request a multiplier and the court declined to apply one.
2. Analysis
Appellants do not dispute that, in light of the attorney fee provision in the Equalization Agreement, respondents were entitled to an award of reasonable attorney fees. (Civ. Code, § 1717.) Instead, appellants challenge the attorney fee award as excessive and unreasonable.
We review the attorney fee order under the abuse of discretion standard of review. “As our high court has repeatedly stated, ‘ “ ‘[t]he “experienced trial judge is the best judge of the value of professional services rendered in his [or her] court, and while his judgment is of course subject to review, it will not be disturbed unless the appellate court is convinced that it is clearly wrong”-meaning that it abused its discretion.’ ” ’ [Citations.]” (Children’s Hospital and Medical Center v. Bonta (2002) 97 Cal.App.4th 740, 777; see also Ketchum v. Moses (2001) 24 Cal.4th 1122, 1132.)
“[T]he fee setting inquiry in California ordinarily begins with the ‘lodestar, ’ i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. ‘California courts have consistently held that a computation of time spent on a case and the reasonable value of that time is fundamental to a determination of an appropriate attorneys’ fee award.’ [Citation.] The reasonable hourly rate is that prevailing in the community for similar work. [Citations.] The lodestar figure may then be adjusted, based on consideration of factors specific to the case, in order to fix the fee at the fair market value for the legal services provided. [Citation.] Such an approach anchors the trial court’s analysis to an objective determination of the value of the attorney’s services, ensuring that the amount awarded is not arbitrary. [Citation.]” (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095 (PLCM).)
Our review of the record confirms that the trial court utilized the lodestar method to properly calculate a reasonable fee. It separately considered the hourly rates and number of hours expended by each of the attorneys included in the overall fee request and found that each was reasonable. The court’s reasonableness findings were, in turn, supported by findings of fact regarding the circumstances surrounding this particular litigation. Furthermore, the court exercised its discretion to decline to award some of the fees that respondents sought to recover. Despite their lengthy arguments in this court, appellants fail to establish that the trial court abused its discretion.
Appellants filed no fewer than 85 pages of arguments in an effort to show that the fee award was excessive and unreasonable.
Appellants contend the hourly rates charged by all of respondents’ attorneys, with the exception of Nelson Wild, are unreasonably high because they exceed the rates that a probate attorney would charge for comparable work. Appellants reason that Mr. Wild was the only attorney on the other side of this case who had probate experience and, therefore, Wild’s hourly fee should have set the top hourly rate for any of respondents’ attorneys.
“The reasonable hourly rate is that prevailing in the community for similar work.” (PLCM, supra, 22 Cal.4th at p. 1095.) Here, the trial court made findings to the effect that this was not a routine probate matter and that the complex issues and serious allegations of wrongdoing justified the employment of experienced litigators. The court’s findings were supported by substantial evidence including Mr. Wild’s declaration, which appellants attempt to use to their own advantage. As Wild explained, Michael and Robert hired him to file the petition in this case. However, when appellants insisted that this case was too complex for the probate department and had to be referred to the master calendar for trial setting, Michael and Robert decided to associate additional counsel with significant litigation experience.
Appellants also argue that the “number of hours incurred” by respondents’ counsel was excessive. To support this argument, appellants recount the history of this litigation from their perspective, ignoring numerous crucial events and attempting to portray respondents as “aggressive, ” “deceptive, ” “evasive, ” and “ruthless” litigants. Again, appellants completely ignore the trial court’s findings, including that appellants “were responsible for unreasonably escalating the matter into something it did not need to become” and that appellants forced respondents’ counsel to “expend hours and efforts that might not have been necessary had [appellants] counsel focused their case in a more reasonable manner at an earlier stage in the life of the case.” Because appellants proceed as though these findings were never made and ignore evidence in the record which is unfavorable to them, we summarily reject this and similar arguments.
Appellants’ remaining challenges to the reasonableness of the fee award are all unfounded. For example, they complain that respondents should not have been awarded fees for duplicative work, but ignore the fact that the trial court reviewed the time records and concluded there was no duplication. They also mischaracterize work performed by Robert’s attorney as duplicative, again ignoring the trial court’s express finding to the contrary.
Appellants also diverge from the reasonableness inquiry and attempt to challenge the award on numerous other grounds which simply are not appropriate. For example, they argue that any fee award was improper because the court failed to complete the second part of this case. We have already rejected this faulty notion. Appellants also contend that the fee order must be reversed because respondents failed to disclose to the trial court that Ben Winslow was paid for his legal services in this action. This lengthy argument is absolutely irrelevant since respondents did not seek to recover fees they allegedly paid to Winslow.
Appellants’ final argument is that the attorney fee award must be reversed because of “extrinsic fraud.” They contend that respondents committed a fraud on the court by failing to disclose that all of the attorneys who represented them in this action, including Ben Winslow, were paid for their services by the ENGIT, and not by these individual respondents. We have two responses to this argument.
First, appellants’ premise that respondents did not “incur” these fees if they did not use personal funds to pay their attorneys is patently incorrect. “[A]ttorney fees are incurred by a litigant if they are incurred in his behalf, even though he does not pay them.” (Lolley v. Campbell (2002) 28 Cal.4th 367, 373; see also Ketchum v. Moses, supra, 24 Cal.4th at p. 1141; PLCM, supra, 22 Cal.4th at p. 1097, fn. 5.)
Second, the question whether it was proper for respondents to charge the ENGIT for legal expenses they incurred in this litigation was not relevant to the attorney fee request presented to this trial court. By the same token, the issue is not properly before this court.
IV. DISPOSITION
The judgment and the post-judgment attorney fee order are affirmed.
We concur: Kline, P.J., Richman, J.
Throughout their briefs, appellants repeatedly make arguments which are based on faulty factual premises. We strongly discourage counsel from adopting this approach in the future.
“Ms. Mix: I’m still a little unclear on what the exact ruling is.
“The Court: What are you unclear about?
“Ms. Mix: Am I correct that – I understand you aren’t going to take any more – I understand you aren’t going to reconsider Justice Low’s order?
“The Court: Correct.
“Ms. Mix: I understand further that the witnesses will be permitted to testify as to their state of mind at the time that they entered into the equalization agreement.
“The Court: Correct.
“Ms. Mix: So I guess my question is, then, will you be taking into evidence the March 8th order
“The Court: I think I’ve already ruled on that. I’ve taken notice of the order’s existence. I’ve taken notice that Judge Low made findings of fact. And I have taken notice of the fact that that order is not final, and has no res judicata effect.”
“Ms. Mix: Thank you.”
The court’s factual findings on this issue are superfluous and its legal conclusion is unsupported by any authority. The Equalization Agreement and the 1993 Settlement Agreement are two separate contracts. No provision in the Settlement Agreement barred appellants from challenging the validity of the Equalization Agreement. However, as the trial court properly found, appellants did fail to prove their defenses at trial.
Gridley, supra, 166 Cal.App.4th 1562, was an appeal from orders in the Dixon Ranch proceeding in the Elsie estate case and its impact will be decided by that trial court. Nothing we say here should be construed otherwise.