Opinion
B293712
05-25-2021
ARTHUR C. HIGGINS, Plaintiff and Respondent, v. LUPE HIGGINS, Defendant and Appellant.
Kasai Law Group, Wayne T. Kasai and Kristin E. Reynolds, for Defendant and Appellant. Law Office of Robert E. Knudsen and Robert E. Knudsen for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. KC066345) APPEAL from a judgment of the Superior Court of Los Angeles County, Dan T. Oki, Judge. Affirmed. Kasai Law Group, Wayne T. Kasai and Kristin E. Reynolds, for Defendant and Appellant. Law Office of Robert E. Knudsen and Robert E. Knudsen for Plaintiff and Respondent.
The successor trustee of a family trust, Arthur Higgins (Arthur), sued his brother's wife, Lupe Higgins (Lupe), to impose a constructive trust over the funds in certain bank accounts. At the conclusion of Arthur's case-in-chief, Lupe moved for judgment in her favor and the trial court granted the motion. In a published decision, we reversed and held that "[a]t this stage of the proceedings, the evidence shows [the successor trustee] is entitled to a constructive trust as a matter of law." We clarified, though, that Lupe would be entitled to present evidence on remand and the trial court would need to make a final determination of the issues. (Higgins v. Higgins (2017) 11 Cal.App.5th 648, 664 (Higgins I).) On remand, after Lupe presented her defense, the trial court entered judgment in Arthur's favor. We are asked to decide whether the trial court properly understood our directions in Higgins I and whether substantial evidence supports the judgment.
I. BACKGROUND
In 1994, Maria Lopez Higgins (Maria) and her husband Bartlett Higgins (Bartlett) established a family trust to provide for them during their lifetimes. (Higgins I, supra, 11 Cal.App.5th at 651-652.) Maria and Bartlett were the trust's original trustees. (Id. at 652.) Under the terms of the trust, upon the death of the second spouse the successor trustee would distribute a fixed sum to their grandchildren and Maria's niece—with the remaining balance of the trust's assets divided among Bartlett's sons, including Arthur and W. Clive Higgins (Clive). (Id. at 651-652.)
Following Bartlett's death in 1995, Clive visited Maria regularly and helped her manage her finances. (Higgins I, supra, 11 Cal.App.5th at 652.) Maria suffered from progressively worsening cognitive decline, and she was ultimately diagnosed with dementia. (Id. at 652-653.) As her cognitive abilities waned, Maria added Clive as a joint holder of her bank accounts. (Id. at 653.)
Less than a year after Maria was diagnosed with dementia, Clive became very ill. (Higgins I, supra, 11 Cal.App.5th at 653.) By March 2012, Clive could not walk or care for himself and he was completely dependent on hospice care and his wife Lupe. (Ibid.) At the end of that month, Clive transferred funds totaling more than $430,000 from Maria's bank accounts (checking account, savings account, and certificates of deposit) into new accounts in his and Lupe's names. (Id. at 653-654.) Although Clive and Lupe were the owners of the new accounts, the signature cards for each account indicated the accounts were held in trust for Maria. (Ibid.) At the time Lupe signed the documentation for the new accounts and certificates of deposit, she understood that all of the funds in those accounts were to be used to take care of Maria, and consistent with that purpose, Maria's social security checks, rental income, and funds from life insurance companies and other entities were deposited into those accounts. (Id. at 654.) Less than two months after opening the new accounts, Clive died. (Ibid.)
A month after Clive died, Lupe changed the ownership of the bank accounts and certificates of deposits. (Higgins I, supra, 11 Cal.App.5th at 654.) The signature cards for the new accounts listed Lupe as the sole owner and there was no designation that the accounts were held in trust for Maria. (Id. at 654-655.) Lupe did continue to use funds from the accounts to pay for Maria's nursing home, however. (Ibid.)
Three months after Clive died, Maria died. (Higgins I, supra, 11 Cal.App.5th at 655.) Lupe paid for Maria's funeral and made the specified distributions to Maria and Bartlett's grandchildren (but not to Maria's niece). (Ibid.) Lupe then gave money from the retitled accounts previously held in trust for Maria to Lupe's mother, sister, and brother. (Ibid.) She also closed the certificate of deposit accounts, which contained approximately $200,000 in total, and transferred the funds into the savings account, which she used to support herself. (Ibid.)
Less than three years after Maria's death, only $22,000 remained in the savings account. (Ibid.) All of Lupe's bank transactions, both before and after Clive's death, were conducted through one bank manager, Juan Sandoval (Sandoval). (Id. at 653, 655.)
A. Higgins I
In September 2013, a little more than a year after Maria died, Arthur, in his capacity as successor trustee of the Bartlett family trust, sued Lupe to obtain a court order imposing a constructive trust on the funds in the accounts. (Higgins I, supra, 11 Cal.App.5th at 656.) The trial court held a bench trial, and at the conclusion of Arthur's presentation of evidence, Lupe moved for judgment in her favor pursuant to Code of Civil Procedure section 631.8. (Id. at 656-657.)
Undesignated statutory references that follow are to the Code of Civil Procedure.
The trial court granted the motion for judgment. The court believed Lupe had a clear moral obligation to return the money to the family trust, but, relying on the signature cards for the accounts in Clive and Lupe's names, found she had no legal obligation to do so because the "in trust for" designation meant the money would only go to Maria after the deaths of both Clive and Lupe. (Higgins I, supra, 11 Cal.App.5th at 658.)
On appeal, we reversed and held the evidence presented by Arthur in his case-in-chief "established all of the conditions necessary to impose a constructive trust." (Higgins I, supra, 11 Cal.App.5th at 658.) There was, we explained, clear and convincing evidence Clive and Lupe did not intend to create Totten trust accounts but rather "irrevocable trust accounts in which Maria had a present beneficial interest in the funds on deposit." (Id. at 661.) With regard to Lupe, we determined "it is clear from her actions and testimony that she agreed to hold the funds in trust for Maria and use them for Maria's needs. Lupe signed signature cards that stated the accounts were in trust for Maria. She testified that the funds in the accounts belonged to Maria, and she believed everything in the accounts was for Maria. She referred to the funds several times during her testimony as Maria's money. Lupe used the money in the accounts for Maria's needs, and after Maria's death, for the expenses of Maria's funeral and specific bequests set forth in Maria's estate plan." (Id. at 662.)
"A Totten trust is a 'tentative trust,' created when a depositor opens a bank account 'in trust for' another person, but reserves the power to withdraw funds during the depositor's lifetime. [Citations.] If the trust is not revoked before the depositor's death, any balance in the account is payable to the beneficiary. . . . [¶] . . . [¶] . . . 'In the case of a Totten trust account, the beneficiary has no rights to the sums on deposit during the lifetime of any party, unless there is clear and convincing evidence of a different intent. If there is an irrevocable trust, the account belongs beneficially to the beneficiary.' [Citation.]" (Higgins I, supra, 11 Cal.App.5th at 660-661.)
We additionally explained there was "clear and convincing evidence that Lupe continued to hold the funds in trust for Maria after Clive's death, as the parties to the account intended, and Maria continued to own the beneficial interest in the accounts after Clive's death. [¶] Lupe repudiated the trust by removing Maria's name from the accounts after Clive's death, and she breached her fiduciary duty by using the funds for her own purposes." (Higgins I, supra, 11 Cal.App.5th at 662-663.) Lupe's "repudiation of the trust by removing Maria's name from the accounts was a wrongful act supporting the imposition of a constructive trust." (Id. at 664.)
Our opinion also addressed the state of the evidence and what was to happen on remand. We wrote: "At this stage of the proceedings, the evidence shows Arthur is entitled to a constructive trust as a matter of law. On remand, however, Lupe will be entitled to present evidence, and the trial court will make a final determination of the issues." (Higgins I, supra, 11 Cal.App.5th at 664.)
After we denied her petition for rehearing, Lupe petitioned for review by our Supreme Court and argued Higgins I was wrongly decided because we purportedly failed to consider various sections of the Probate Code, including sections 80 and 15400. The Supreme Court denied the petition and our remittitur issued in August 2017.
B. The Proceedings on Remand
When trial resumed after our reversal, the court invited the parties, beginning with Lupe, to make an opening statement as to what they believed the evidence would show in view of Higgins I. Lupe's counsel asserted that, under Higgins I, his client had a right to present evidence contradicting our conclusion that an irrevocable trust, not a Totten trust, was created when Clive and Lupe opened joint accounts in trust for Maria.
Before hearing Arthur's opening statement, the trial court indicated it had reservations about the position taken by Lupe's counsel regarding the effect of Higgins I. The trial court told counsel: "This is why I was interested in hearing your opening statement, because you and I have a pretty serious disagreement over what the Court of Appeal did. While it's true that the Court of Appeal con[cluded] that on remand, Lupe would be entitled to present evidence, they said that right after they said that the evidence shows Arthur is entitled to a constructive trust as a matter of law. [¶] The Court of Appeal clearly found that my analysis that these could be considered Totten trusts was in error. They clearly found that the checking account, the savings account, and both certificates of deposit were held by Lupe and Clive in trust for Maria."
Arthur's position, attentive to our language in Higgins I about what should occur on remand, was as follows: "Your Honor, I think the Court of Appeal decision does allow for the presentation of evidence. I think the defense as a matter of right is entitled to put testimony on. Whether . . . that testimony is sufficient to overcome the clear and convincing evidence that the plaintiff has presented, is for the court to determine."
The trial court permitted Lupe to proceed with her defense case. She testified and authenticated various checks that she wrote on Maria's behalf, such as to Maria's caregivers, and described her and her husband's relationship with Maria. Arthur, called as a witness by Lupe, testified about assets (past and present) held in the family trust. Ben Tsugawa (Tsugawa), a former manager of the bank where Clive and Lupe opened the accounts "in trust for" Maria, testified that based on his review of the accounts' documentation, including the signature cards, the accounts were Totten trusts, not irrevocable trust accounts.
That was consistent with his testimony during Arthur's presentation of evidence, testimony we considered in Higgins I. (Higgins I, supra, 11 Cal.App.5th at 656 ["Tsugawa testified that the bank views the designation ["in trust for"] like a Totten trust"].)
Lupe's principal witness, however, was Sandoval, the bank manager who opened and closed the accounts at issue. Like Tsugawa, Sandoval testified the accounts owned by Clive and Lupe in trust for Maria were Totten trusts and, like Tsugawa, he based his conclusion on the accounts' documentation, specifically the designation on the signature cards. Sandoval could not explain, however, why he typed in the "in trust for" designation on the signature cards instead of simply checking the pre-printed box for a Totten trust.
Sandoval also testified that after opening the accounts in Clive and Lupe's names, accounts in which Maria would have no ownership interest and no ability to withdraw funds, he arranged for Maria's social security and rental income checks to be deposited into those accounts without her consent. When Lupe later opened new accounts after Clive's death that were titled in her name alone and without any designation that they were for Maria's benefit, Sandoval then arranged for Maria's social security and rental income checks to be deposited into those accounts, even though that was contrary to the bank's internal policies. Sandoval testified he was willing to "bend some bank rules" for Lupe because she was a good customer.
After hearing Lupe's evidence and the parties' closing arguments, the trial court announced "that the clear and convincing evidence necessary for the imposition of a constructive trust found to exist by the Court of Appeal ha[d] not been overcome by [the] new evidence that ha[d] been presented."
In a statement of decision issued later, the trial court explained its reasoning in greater detail. The court adopted the factual summary of the case in Higgins I, except as modified by additional findings by the court and as modified by the additional evidence presented by Lupe during her defense. The court determined that the joint accounts owned by Clive and Maria were opened so Clive could assist Maria in managing her finances and that Clive's actions after the joint accounts were opened was "totally consistent" with that purpose. It was only when Clive was dying and unable to assist Maria that Lupe was added to the accounts. The "clear inference" from the "in trust for" designation on the signature cards was that Lupe was added to the accounts so that she could act in Clive's stead upon his incapacity or death and thereby continue to provide assistance to Maria in managing her money. The court determined further that the presumption arising from the signature cards—that joint bank accounts created true joint tenancy interests—was overcome by contrary evidence presented by Arthur as to the actual intent of Clive and Maria when the joint accounts were first created.
With regard to the defense's principal witness, Sandoval, the court found his testimony—to the extent it conflicted with the conclusion in Higgins I that no Totten trust accounts were created—to be "very lacking in credibility." It appeared to the court that Sandoval "was trying to deflect his negligence or the bank's negligence" onto members of the Higgins family.
The trial court found the "additional evidence submitted by Lupe after remand [wa]s insufficient to rebut or overcome the evidence submitted by Arthur." Because Lupe held the funds in the accounts in trust for Maria, the court found Lupe's repudiation of the trust by removing Maria's name from the accounts and using the funds in those accounts for her own purposes a wrongful act supporting the imposition of a constructive trust. Accordingly, it entered judgment in favor of Arthur in the amount of $565,735.57.
II. DISCUSSION
Lupe maintains the judgment must be reversed for two related reasons: first, because the trial court misunderstood Higgins I and believed its "only option" upon remand was to find in favor of Arthur, and second, because there was either "no evidence" or "no substantial evidence" that Clive and Lupe created irrevocable trusts. Neither reason is convincing.
The first of the two contentions is not borne out by the record. The trial court was indeed skeptical on remand that Lupe could adduce evidence overcoming the strong evidence Higgins I identified in support of imposing a constructive trust (which the court adopted in its statement of decision), but the court gave Lupe a full and fair opportunity to make her case. Indeed, Lupe does not identify or challenge any rulings by the trial court during the presentation of her defense that were arguably erroneous and prejudicial; instead, her appeal is concerned solely with trial court's ultimate decision. There is, in short, nothing to substantiate Lupe's assertion that the trial court believed its only option upon remand was to find in Arthur's favor.
Lupe's second argument, the contention that there is no substantial evidence Clive and Lupe created irrevocable trust accounts fails on the full record now before us as informed by our earlier conclusion in Higgins I as to the probative force of Arthur's evidence, which is law of the case. (See generally Leider v. Lewis (2017) 2 Cal.5th 1121, 1127 ["'"The doctrine of 'law of the case' deals with the effect of the first appellate decision on the subsequent retrial or appeal: The decision of an appellate court, stating a rule of law necessary to the decision of the case, conclusively establishes that rule and makes it determinative of the rights of the same parties in any subsequent retrial or appeal in the same case"'"], citations omitted; Hard v. Hollywood Turf Club (1955) 134 Cal.App.2d 174, 179 ["On the second appeal, even though the evidence may be different, unless it is substantially different in a material respect, the doctrine of the law of the case applies"].) In Higgins I, we held there was ample evidence to support a judgment in Arthur's favor at the conclusion of his case-in-chief, i.e., there was clear and convincing evidence that Clive and Lupe intended to create irrevocable trust accounts for Maria's benefit, not Totten trust accounts. Lupe presented conflicting evidence during her defense case on remand, but the court was not obligated to credit it—and, more importantly, the court did not credit it, finding most significantly that Sandoval was a not credible witness. That is the end of the matter for purposes of appellate review for substantial evidence; the familiar rule is "we do not determine whether substantial evidence would have supported a contrary judgment, but only whether substantial evidence supports the judgment actually made by the trial court." (Norasingh v. Lightbourne (2014) 229 Cal.App.4th 740, 753; see also People v. Williams (2015) 61 Cal.4th 1244, 1262 ["We defer to the trial court's credibility assessments 'based, as they are, on firsthand observations unavailable to us on appeal'"]; Hasson v. Ford Motor Co. (1982) 32 Cal.3d 388, 398 ["'We do not reweigh the evidence on appeal, but rather determine whether, after resolving all conflicts favorably to the prevailing party [citations], and according prevailing parties the benefit of all reasonable inferences [citation], there is substantial evidence to support the judgment'"].) It is obvious, particularly in light of our decision in Higgins I, that there is such substantial evidence supporting the judgment.
The trial court's credibility finding was well-grounded in the record—based, among other things, on (1) Sandoval's admission that he repeatedly arranged for Maria's income to be deposited into accounts over which she had no control or ownership and did so without her consent in contravention of bank policy, and (2) Sandoval's inability to explain why he typed in the "in trust for" designation on the signature cards for the joint accounts instead of simply checking the pre-printed box for a Totten trust. --------
DISPOSITION
The judgment is affirmed. Arthur Higgins shall recover his costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
BAKER, Acting P. J. We concur:
MOOR, J.
KIM, J.