Opinion
C084066
10-09-2019
Estate of LEON A. KIRKLAND, Deceased. DOUGLAS KAPLAN, as Administrator, etc., Petitioner and Respondent, v. DWAIN L. KIRKLAND, Objector and Appellant; PETER PETERSON et al., Respondents.
NOT TO BE PUBLISHED California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published,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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. PR7731)
THE APPEAL
The probate court vacated an earlier order in which it had conditionally confirmed the sale of real property. The court found it had no authority to confirm the sale because the winning bid was not submitted in writing on the day of the hearing.
Appellant Dwain L. Kirkland appeals from the probate court's order. He contends the court erred because the earlier order was valid. He claims he timely fulfilled the conditions which the confirming order had imposed on him, and the court timely and effectively received a written offer when the bidder and the estate administrator entered into a written purchase agreement.
We affirm the judgment.
FACTS AND PROCEEDINGS
Appellant is one of three beneficiaries of the decedent's estate. The estate included a 79-acre almond orchard in Colusa County. Over appellant's objection, the probate court on December 22, 2015, granted the estate's special administrator, respondent Douglas Kaplan, authority to sell the orchard. The order was entered on February 16, 2016.
On March 2, 2016, the administrator reported his sale of the orchard for $2,000,000 and petitioned for an order confirming the sale. He set the hearing for confirmation on March 29, 2016.
However, on March 25, 2016, appellant appealed the court's order that authorized the administrator to sell the property. (Kaplan v. Kirkland C082031.) In general, an appeal "stays the operation and effect" of the probate court's order. (Prob. Code, § 1310, subd. (a), statutory section references that follow are to the Probate Code.)
At the March 29 hearing to confirm the sale, the court acknowledged that appellant had appealed its prior order authorizing the sale. Notwithstanding the pending appeal, the administrator proposed going forward with confirming the sale subject to conditions. Under the conditions, the sale would be "consummated after the Court confirms the sale upon the withdraw [sic] of the notice of appeal . . . ." The buyer would be required to close within 10 days of notice of the withdrawal of the appeal. If appellant did not withdraw his appeal, the matter would be continued "over a reasonable period of time, perhaps 60 days." If appellant still did not withdraw his appeal up to the continued time, the court could consider an application by the administrator to require appellant to post an undertaking and any other requests for relief.
The court stated a concern that confirming the sale would "further the order of this appeal" and violate the stay under section 1310. The administrator admitted it was "a very fine line," but he stated he was seeking an order confirming the sale subject to the conditions. He said, "I understand it does also involve the prior order, but is [sic] not directly involved in the prior order. [¶] We just want a separate order confirming sale subject to these conditions."
The court agreed that so long as the confirmation of sale was conditioned on the appeal being withdrawn, it would not be making an order that furthered operation of the appealed order. Each party also agreed.
The administrator then announced there were overbidders present at the hearing and the almond market was declining, so it was important to settle the price that day. The court proceeded to hear the overbids "auction style." Respondents Peter and Patricia Peterson, doing business as Peterson Ranch, orally submitted an overbid of $2,200,500, which was the highest bid. The court approved the sale to the Petersons under the conditions previously set forth by the administrator.
The administrator asked for a continued hearing date on the report of sale in case the sale was not consummated and the court had to rule on his application to post an undertaking. All counsel agreed to continue the hearing to April 26, 2016. No written offer or contract of sale from the Petersons was submitted to the court prior to the close of the March 29 hearing.
On April 20, 2016, the court entered an "Order Confirming Sale of Real Property" based on its orders in the March 29 hearing. The order confirming sale stated it was subject to appellant withdrawing his appeal. If appellant did not withdraw his appeal "before April 26, 2016, the Report of Sale and Petition for Order Confirming Sale of Real Property is continued to April 26, 2016 . . . for further proceedings." Although titled an order confirming sale, the order did not direct conveyance of title to the Petersons or recording of any order confirming sale. It also did not provide for automatic issuance of an order confirming sale, directing conveyance of title, or recording of any order confirming sale if appellant withdrew his appeal by a certain date.
The Petersons and the administrator entered into a written purchase agreement on April 1, 2016. Unbeknown to the court, they agreed to an addendum that set a specific deadline for appellant to withdraw his appeal. The addendum reads in part: "This sale is contingent upon resolution [sic] current appeal by April 26, 2016. If unable to complete sale at that time Buyer shall have [the] option to cancel sale and have all deposits returned to Buyer." The agreement and the addendum were not submitted to the court for its review or approval.
At the hearing on April 26, appellant's counsel asked for a 14-day continuance. He wanted additional time to gather more information so he could speak with appellant about the sale. The administrator did not oppose the continuance. The court continued the matter "for the same purpose" to May 10, 2016. No representative of the Petersons appeared at this hearing.
By letter dated April 29, 2016, the Petersons informed the court they were cancelling the sale pursuant to the terms of the purchase agreement. They also requested the court to return their deposit of $250,000.
At the May 10 hearing, the administrator announced that appellant was going to withdraw his appeal that day. The court, however, stated it had received the Peterson's letter cancelling the sale. The administrator stated there was no termination date on the sale agreement itself, and he believed they were still within a reasonable time. His position was once the appeal was withdrawn, he would make a demand on the Petersons and explain their liability if they did not perform.
The court announced it understood the appeal would be withdrawn and the sale would go forward. It also confirmed with the administrator that the request for a bond was no longer necessary given the appeal's withdrawal. No representative of the Petersons appeared at the hearing.
Appellant withdrew his appeal on May 10, 2016. The administrator informed the Petersons of the withdrawal and demanded they proceed with the purchase. The Petersons refused.
The Petersons filed a motion with the court for an order directing the return of their deposit. They also asked the court to confirm they were lawfully entitled to withdraw their offer because the property was not available for sale by April 26.
The administrator also petitioned the court. He sought an order pursuant to section 10350 vacating the court's earlier order announced March 29 and entered April 20 approving the sale to the Petersons. The administrator admitted he had signed the addendum that gave the Petersons the right to cancel if appellant did not withdraw his appeal by April 26. He asked the court to vacate its earlier order so he could proceed with selling the property anew subject to the court's confirmation. He also asked to reserve the issue of damages arising from the Petersons' failure to comply with the court's April 20 order.
The Petersons waived their motion and the hearing proceeded on the administrator's petition. The petition surprised the court. When it accepted the overbid subject to the condition that appellant withdraw his appeal, no specific time was set for the termination of that condition. Subsequently, and without court authorization, the administrator inexplicably set April 26 as the deadline. The court did not believe that the setting of the date affected its acceptance of the overbid.
The court stated it could not confirm the sale until the appeal was dismissed, but there was no hard and fast deadline set for the appeal to be dismissed; the implied condition was a reasonable time. The court said it validly accepted the overbid, and the condition had now been satisfied. Thus, it was prepared to confirm the sale and go forward with it. However, if all of the beneficiaries joined the request to vacate the acceptance, the court would not view that as a breach by the Petersons and it would return their $250,000 deposit.
Hearing this, and despite his petition, the administrator said it was his preference to go through with the sale. Appellant also stated he would rather have the sale go forward. But after recessing to confer, the parties asked to continue the matter for one week, which the court did.
At the next hearing, the court continued the hearing again. It asked for additional briefing on whether it had jurisdiction to proceed as it did at the March 29 hearing when it conditionally approved the sale and whether it in fact confirmed the sale at that hearing despite its belief that it did not.
When the parties met again with the court, the court had one question for each party: when the court accepted the Petersons' overbid on March 29, did the Petersons submit a written offer by the close of the hearing? The administrator said no. Appellant argued that the March 29 hearing was continued, and it concluded on May 10 when he withdrew his appeal. By that time, a written offer was in place in the form of the written purchase agreement between the Petersons and the administrator.
The court disagreed with appellant. By law, it could confirm only written overbids submitted before the close of the hearing. No written overbid that could have been confirmed was presented to the court by the conclusion of the March 29 hearing where it approved the sale. Because no written offer was submitted before the close of that hearing, the court vacated the April 20 order conditionally confirming the sale to the Petersons and it directed that their deposit be returned to them. That the March 29 hearing was continued to April 26 and then to May 10 "was of no consequence."
The administrator subsequently sold the property to a third party for $1,801,000. Appellant's appeal of the trial court's order confirming that sale is pending before this court. (Kaplan v. Kirkland (C085448).)
DISCUSSION
Appellant contends the court erred when it vacated its order confirming the sale. He claims: (1) the court had jurisdiction to confirm the sale because he timely withdrew his appeal on May 10, and even if he had not, the appeal did not stay the court's authority to confirm the sale conditionally, and in any event, the issue is moot because he withdrew his appeal; and (2) the court lawfully confirmed the sale with conditions on March 29, and it received a written offer before the hearing, which was continued two times, finally concluded on May 10, and alternatively, the addendum to the purchase agreement was not enforceable.
The Petersons defend the probate court's vacating its order confirming the sale and returning their deposit. Among other things, they argue appellant lacks standing to appeal the order, and the trial court had no jurisdiction to confirm the sale while appellant's appeal of the order authorizing the sale was pending.
We address the Petersons' arguments first.
I
Preliminary Arguments
The Petersons claim appellant lacked standing to appeal the trial court's order, and his pending appeal on the earlier order deprived the court of jurisdiction to confirm the sale. Neither of these arguments are dispositive.
Contrary to the Petersons' assertion, there is no doubt appellant has standing to appeal the court's order. Any "party aggrieved" may file an appeal (Code Civ. Proc., § 902), and a beneficiary of a probate estate may be an aggrieved party even if he does not appear at the probate court hearing. "The failure of a beneficiary who is aggrieved by the order to participate in the probate proceeding below does not deprive the beneficiary of the right to appeal from the order." (Estate of Zabriskie (1979) 96 Cal.App.3d 571, 575.)
"In contradistinction to a creditor, a beneficiary in an estate is generally held to be a 'party aggrieved' within the meaning of [former Code of Civil Procedure] section 938 [predecessor to Code of Civil Procedure section 902], without the necessity of first taking the steps necessary to make himself a party to the record. [¶] . . . [¶]
"Probate proceedings are in rem and beneficiaries are in effect parties to the action, even if not parties to the record. Their vested interest is immediate and direct. It is not remote or contingent, as in the case of a creditor whose claim has been rejected. Moreover, beneficiaries in probate proceedings are generally represented, in effect if not in actuality, by an executor, administrator, or testamentary trustee. Their interest is almost always the specific subject matter of the order from which they seek to appeal. They are in no real sense strangers to the action." (Estate of Partridge (1968) 261 Cal.App.2d 58, 63-64, original italics.)
The Petersons further claim that appellant's appeal of the earlier order authorizing the sale deprived the trial court of jurisdiction to confirm the sale, even conditionally. In general, an appeal of a probate court's order "stays the operation and effect of the judgment or order." (§ 1310, subd. (a).)
However, there is a statutory exception to that rule unique to probate courts. Even though an appeal is taken from a probate order, "for the purpose of preventing injury or loss to a person or property, the trial court may direct the exercise of the powers of the fiduciary . . . from time to time, as if no appeal were pending. All acts of the fiduciary pursuant to the directions of the court made under this subdivision are valid, irrespective of the result of the appeal." (§ 1310, subd. (b).)
With this statute, "[t]he Legislature recognized that 'some situations present such an extraordinary risk of injury or loss that they require immediate intervention by the probate court to make orders which can be implemented immediately despite the filing of an appeal, and regardless of the result on appeal.' (Kane v. Superior Court [(1995) 37 Cal.App.4th 1577,] 1586.) Nevertheless, the application of section 1310(b) 'must be clearly justified by a showing of risk of imminent injury or loss.' (Conservatorship of Hart (1991) 228 Cal.App.3d 1244, 1261.) [¶] . . . Section 1310(b) may be used to prevent a substantial monetary loss . . . ." (Sterling v. Sterling (2015) 242 Cal.App.4th 185, 199 [probate court did not abuse its discretion ordering sale of sports team under section 1310(b) despite an appeal from that order].)
At the March 29 hearing, the administrator stated he wanted to agree to a sale price for the property that day in part because the almond market was declining. He implied the estate was at risk of losing a higher bid for the property if the sale was not conducted then.
None of the parties have addressed section 1310(b)'s exception to the stay required under section 1310(a). If it were necessary to our ruling, we would ask for supplemental briefing. However, there is another dispositive ground on which we base our judgment. We address that now.
II
Written Overbid
Section 10311 states an overbid may be confirmed only when it is made in writing at the hearing on a petition to confirm a sale. (§ 10311, subd. (a).) "Although local practice may be to accept oral overbids at the sale confirmation hearing, to be valid under the statute, the offer must be reduced to writing before the close of the hearing." (Estate of Roberts (1990) 225 Cal.App.3d 1017, 1022 (Roberts).)
There is no dispute that the Petersons did not submit a written overbid at the March 29 hearing where they made their bid orally. In fact, they did not submit a written offer ever. Nonetheless, appellant contends the Petersons' oral offer was valid, and the trial court erred when it vacated its order confirming the sale to them, because the continuances granted by the court extended the time within which the Petersons were required to submit a written bid, and they effectively submitted their bid by entering into a written purchase agreement on April 1, more than three weeks before the court entered its April 20 order conditionally confirming the sale and some six weeks before the confirmation hearing process finally ended.
Appellant acknowledges that the trial court did not receive a copy of the purchase agreement. He asserts it did not because the Petersons cancelled the contract by their April 29 letter. But he claims the existence of the signed purchase agreement as of April 20 when the court entered its order conditionally confirming the sale demonstrated the parties substantially complied with section 10311's requirement of written bids. Appellant argues that reading section 10311's mandate to require a written bid on the day the court accepts the oral bid elevates form over substance. Section 10311 was enacted to ensure that the parties complied with the statute of frauds and the court exercised supervisory authority over the sale. Appellant claims these purposes were met when the Petersons and the administrator entered into the written purchase agreement.
We disagree with appellant's claims. "The powers and jurisdiction of the probate courts are wholly statutory and a probate court must look to express statutes for its procedures." (Estate of Sampo (1985) 171 Cal.App.3d 767, 774 (Sampo).) Section 10311 expressly requires a winning overbid at a hearing to confirm the sale of real property to be in writing. (§ 10311, subd. (a).) The Petersons did not at any time give to the court a written offer. Thus, the court was without jurisdiction to confirm their bid. "The statutory language is clear: only written offers are to be accepted and confirmed." (Roberts, supra, 225 Cal.App.3d at p. 1022.)
" '[A]n oral bid in court is merely preliminary to submission of a written, signed offer, and only the latter can be basis of a confirmed sale.' [Citations.]" (Sampo, supra, 171 Cal.App.3d at p. 774.) The court clerk's minutes cannot serve as the written offer. (Id. at pp. 773-774; Estate of Greer (1968) 261 Cal.App.2d 827, 830-831.) Cashier's checks in the full purchase amount tendered to the estate at the confirmation hearing cannot serve as the written offer. (Roberts, supra, 225 Cal.App.3d at p. 1019.) The court may confirm only a written overbid presented to it at the confirmation hearing.
Appellant's contentions that the Petersons could submit a written offer after the March 29 hearing because the court continued the matter, and that the Petersons effectively submitted a written offer by executing the purchase agreement, lack merit. A court may in its discretion continue a confirmation hearing to accept additional bids. (Estate of Griffith (1900) 127 Cal. 543, 544-545; Estate of Herz (1956) 147 Cal.App.2d 100, 106.) That is not what the probate court did here. The court accepted and conditionally confirmed the Petersons' oral bid on March 29 and continued the matter only to give appellant time to withdraw his appeal. At no time did the court invite additional bids. The Petersons were thus required to submit a written overbid to the court on March 29. They did not submit one.
Further, the Petersons' execution of the purchase agreement does not strengthen appellant's argument. That document was executed on April 1, missing the March 29 deadline by three days. Moreover, it was not presented to the court. The court cannot confirm a written offer not presented to it.
Appellants' arguments beg the question of whether the probate court has authority in the first place to accept a conditional bid. Early authorities suggest it may not. A condition to perform attached to the offer "deprived the offer of the absolute character which the terms of the order of sale, and the nature of the transaction, required. [The purchaser] did not undertake to pay the entire purchase price, except upon an event which might or might not take place. The probate law contemplates a contract which the buyer may be compelled to complete." (Estate of Bradley (1914) 168 Cal. 655, 661; cf. Estate of Vezina (1953) 116 Cal.App.2d 438, 442-443 [offer subject to conditions of performance imposed on the administrator may be accepted because the court can compel the administrator to perform].)
However, we need not address this matter, as we assume for purposes of argument only that the court had authority to accept a conditional bid. Even so, the probate court did not have authority to accept and confirm an oral overbid that was not converted into a written bid the day of the hearing. It thus correctly vacated its April 20 order conditionally confirming the oral bid.
Because this point is dispositive, we do not address the parties' remaining arguments.
DISPOSITION
The order is affirmed. Costs on appeal are awarded to the administrator in his official capacity and the Petersons. (Cal. Rules of Court, rule 8.278(a).)
/s/_________
HULL, Acting P. J. We concur: /s/_________
HOCH, J. /s/_________
RENNER, J.