Opinion
B224577
08-10-2011
Estate of ANNIE MAE AUSTIN, Deceased. RANDY TAYLOR, As Trustee, etc., Petitioner and Appellant, v. GERALDINE CARR, Objector and Respondent.
Sullivan, Workman & Dee and Sherrill Y. Tanibata for Petitioner and Appellant. No appearance on behalf of Objector 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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. P729335)
APPEAL from orders of the Superior Court of Los Angeles County, Reva G. Goetz, Judge. Reversed.
Sullivan, Workman & Dee and Sherrill Y. Tanibata for Petitioner and Appellant.
No appearance on behalf of Objector and Respondent.
I. INTRODUCTION
This is an appeal from an order sustaining a demurrer without leave to a amend a Probate Code section 9654 petition to recover real property, quiet title and partition real property which had been owned by decedent, Annie Mae Austin. The probate court also struck a first amended cross-petition for recovery of real property, for unjust enrichment, to quiet title and for imposition of a constructive and resulting trust. The petition and cross-petitions were brought by Randy Taylor whose mother, Margaret Taylor, was one of decedent's children. Margaret died after decedent conveyed the property to her.
All further statutory references are to the Probate Code unless otherwise indicated.
Many of the people involved in the transactions/conveyances underlying this case share the same last name. Thus, for clarity, we refer to them by first name only.
We conclude the probate court erroneously determined claims were barred by the statute of frauds. The probate court also erroneously concluded Randy's cross-petition should have been pursued as part of the estate of decedent Margaret Taylor. Accordingly, the orders dismissing the section 9654 petition and striking the cross-petition must be reversed.
II. BACKGROUND
In reviewing an order sustaining a demurrer without leave to amend, we assume the truth of all well-pled factual allegations. (Naegele v. R.J. Reynolds Tobacco Co. (2002) 28 Cal.4th 856, 864-865.) The second amended petition alleged the following facts. Annie Mae, who died on November 24, 1984, was married to Leon Austin who predeceased her. Annie Mae and Leon had nine children including Margaret, Herndon Austin, and Geraldine Carr.
In 1982, Annie Mae conveyed title to the real property located in Victorville to herself, and two of her children, Margaret and Herndon Austin, as joint tenants. In 1985, after Annie Mae's and Herndon's deaths, Margaret conveyed an undivided 50 percent interest in the Victorville property to herself and Geraldine as joint tenants. Margaret and Herndon and subsequently Margaret and Geraldine held title to the Victorville property in trust for the benefit of Annie Mae's heirs. Margaret died in November 2005.
Annie Mae also conveyed title to Margaret and Herndon, as joint tenants, for properties located on Denker Avenue in Los Angeles and in the State of Oklahoma. Although Randy initially petitioned the court regarding title to all three real properties, the Victorville property was the only one at issue by the time of the demurrer and motion to strike hearings. In 1990, the court in a conservatorship proceeding for Leon, ordered Margaret to convey title to the Denker Property to Margaret and Geraldine at 11/36 interests with shares of 2/36 interests to decedent's other children.
During a will contest, Randy withdrew a request to quiet title and cancel deeds to the Oklahoma properties. On April 28, 2008, we affirmed the probate court's order admitting the lost will to probate in an unpublished opinion. (Estate of Annie Mae Austin, Deceased, (Apr. 28, 2008, B196838) [nonpub. opn.].) In October 2008, letters of administration were issued to Anthony Austin and Beverly Nyoka Williams as co-administrators of Annie Mae's estate.
Randy filed a first amended cross-petition for an order establishing constructive trust, for violation of trust, unjust enrichment, constructive fraud, and to quiet title. The first amended cross-petition was filed in Randy's capacity as the successor trustee to the Margaret Taylor Trust and as a successor in interest to Margaret. The first amended cross-petition alleged that Margaret and Geraldine had a confidential relationship.
Shortly after Annie Mae's and Herndon's death, Margaret placed Geraldine on the property's title. At the time the transfer was made, Margaret did not intend to give a gift to Geraldine of the Victorville property. Rather, there was an understanding that the property would be held until an appropriate time to distribute it to other family members. Margaret placed Geraldine on the title to the Victorville property in reliance of Geraldine's assurances that the properties would be held for the benefit of Annie Mae's children and grandchildren. Geraldine allegedly held the property in trust for Annie Mae's children and grandchildren.
Since 2006, Geraldine has claimed complete ownership of the Victorville property. In the second amended petition, Randy requested, pursuant to section 9654, the probate court: quiet title to the Victorville property; cancel the 1985 joint tenancy deed; and partition the property by sale. In the first amended cross-petition, Randy sought a determination that Geraldine held the Victorville property in constructive trust for the heirs of the estate of Annie Mae.
Geraldine demurred to the section 9654 petition on the grounds of, among other things, standing and the statute of frauds. Geraldine also asserted that the probate court had sustained without leave to amend demurrers to a section 850 petition to quiet title to the properties filed by Randy and the co-administrators of Annie Mae's estate in January 2009.
Geraldine moved to strike the cross-petition on the ground it contained the same allegations as the section 850 petition which had been litigated and decided against Randy and the administrators of the estate. Geraldine requested the probate court to strike the cross-petition as a sham pleading pursuant to Code of Civil Procedure sections 435 and 436. Geraldine also requested the probate court strike the cross-petition under its inherent power and/or as a means to curb an abuse of process.
Randy opposed the demurrers. Randy also filed opposition to the motion to strike.
The probate court concluded both pleadings were barred because the oral agreement between Margaret and Geraldine to hold the Victorville property for the benefit of Annie Mae's heirs violated the statute of frauds. In addition, the probate court concluded the matter should have been raised in Margaret's estate. The probate court sustained the demurrer to the second amended petition without leave to amend and granted the motion to strike the first amended cross-petition with prejudice. This timely appeal followed.
On April 7, 2011, we notified the parties that there was an issue as to whether the order sustaining the demurrer to the petition without leave to amend was appealable. This was because the record does not reflect that the judge signed an order or entered judgment against appellant. We noted that the order granting the motion to strike the cross-petition with prejudice was subject to review because it removed all causes of action from the case. (See Code Civ. Proc., §904.1, subd. (a)(1); Wilson v. Sharp (1954) 42 Cal.2d 675, 677; Adohr Milk Farms v. Love (1967) 255 Cal.App.2d 366, 370.)
But, the same is not true of the order sustaining the demurrer to the petition without leave to amend. Generally, an order sustaining a demurrer without leave to amend is not appealable and is reviewable only on appeal from a final judgment. (Gu v. BMW of North America, LLC (2005) 132 Cal.App.4th 195, 202; Estate of O'Brien (1966) 246 Cal.App.2d 788, 791-792, fn. 7.) Ordinarily, in the absence of a judgment dismissing the petition, an appeal from the order sustaining the demurrer would be subject to dismissal. (Estate of O'Brien, supra, 246 Cal.App.2d at p. 798.)
Nevertheless, it was recently held that a minute order sustaining a demurrer without leave to amend a petition for relief from a breach of trust with prejudice should be construed as an appealable order dismissing the case with prejudice. (Quick v. Pearson (2010) 186 Cal.App.4th 371, 377, fn. 2.) Under the circumstances of this case, including the order granting the motion to strike the cross-petition with prejudice, it is appropriate to construe the minute order sustaining the demurrer to the petition without leave to amend as an appealable order dismissing the case with prejudice. (See Quick v. Pearson, supra, 186 Cal.App.4th at p. 377, fn. 2 citing Walker v. Los Angeles County Metropolitan Transportation Authority (2005) 35 Cal.4th 15, 20.)
III. DISCUSSION
A. Review Standards
"On review from an order sustaining a demurrer, 'we examine the complaint de novo to determine whether it alleges facts sufficient to state a cause of action under any theory, such facts being assumed true for this purpose. [Citations.]' [Citation.]" (Committee For Green Foothills v. Santa Clara County Bd. of Supervisors (2010) 48 Cal.4th 32, 42.) The complaint is given a reasonable interpretation by reading it as a whole and with all its parts in their context. (City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 865.) However, the assumption of truth does not apply to contentions, deductions, or conclusions of law and fact. (Ibid.)Furthermore, any allegations that are contrary to the law or to a fact of which judicial notice may be taken will be treated as a nullity. (Interinsurance Exchange v. Narula (1995) 33 Cal.App.4th 1140, 1143; Fundin v. Chicago Pneumatic Tool Co. (1984) 152 Cal.App.3d 951, 955.)
Code of Civil Procedure, section 436 gives a court the discretion to strike a pleading which is not drawn or filed in conformity with the laws of this state. (CLD Const., Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1145.) An order striking a pleading is reviewed for an abuse of discretion. (Quiroz v. Seventh Ave. Center (2006) 140 Cal.App.4th 1256, 1281-1282.) However, the exercise of discretion will not be upheld if it is based on incorrect legal principles. (Great West Contractors, Inc. v. Irvine Unified School Dist. (2010) 187 Cal.App.4th 1425, 1459-1460.)
B. The Statute of Frauds
The probate court concluded the statute of frauds barred Randy from pursuing claims against Geraldine which resulted from a joint tenancy deed executed by Margaret. The second amended petition alleged that Margaret initially acquired title to, and was holding the Victorville property in trust for, Annie Mae's heirs until distribution. Margaret then conveyed title to Geraldine with the same understanding that the property was being held for Annie Mae's heirs. Margaret died in 2005. In 2006, Geraldine repudiated the agreement, claiming she was the sole owner of the Victorville property. The cross-petition added that Geraldine acquired title to the Victorville property through a confidential relationship, (i.e., her sister Margaret).
Simply stated, these allegations raise constructive trust issues. Civil Code sections 2223 and 2224 explain the circumstances under which a constructive trust will arise. Civil Code section 2223 provides: "One who wrongfully detains a thing is an involuntary trustee thereof, for the benefit of the owner." Civil Code section 2224 provides: "One who gains a thing by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act, is, unless he or she has some other and better right thereto, an involuntary trustee of the thing gained, for the benefit of the person who would otherwise have had it."
Once the circumstances of a constructive trust were alleged, Randy was entitled to seek relief from the courts. A constructive trust is a remedy, which is used by a court of equity, to compel a person, who has property to which he or she is not justly entitled to have, to transfer the property to the person who is entitled to receive it. (Douglas v. Superior Court (1989) 215 Cal.App.3d 155, 160; see also Civ. Code §§ 2223 & 2224.) The rule applies to agreements to reconvey property. Thus, "where one has voluntarily assumed a relation of personal confidence with another and receives conveyance of the latter's property, paying no consideration therefor, and promising that the property will be held for the benefit of the grantor and will be reconveyed upon demand, and the grantor has no other purpose in transferring the property, a court of equity will decree a trust for the benefit of the grantor." (Lyttle v. Fickling (1945) 72 Cal.App.2d 383, 388-389.)
In this case, notwithstanding the constructive trust issue, the probate court concluded the second amended petition and the cross-petition were barred by the statute of frauds. But, if the petitions' allegations are true, Geraldine is holding title to the Victorville property as an involuntary trustee for the benefit of the person or persons who would otherwise have been entitled to it. (Civ. Code, §§ 2223, 2224; Orella v. Johnson (1952) 38 Cal.2d 693, 696-697.)
We accept the allegations as true solely for purposes of resolving the issues on appeal from the order sustaining a demurrer to the petition and striking a cross-petition which sought to impose a constructive trust. The question of whether there was an actual agreement to hold the property for the benefit of the heirs is a factual issue.
Moreover, as an involuntary trustee, Geraldine was not entitled to rely on the statute of frauds as a defense to the petition. (Juran v. Epstein (1994) 23 Cal.App.4th 882, 894.) It is well-established in California that the statute of frauds is not a bar to the imposition of a constructive trust, which trust arises by operation of law. (Estate of Brenzikofer (1996) 49 Cal.App.4th 1461, 1469.) The general rule in this state is "'"that the statute of frauds, having been enacted for the purpose of preventing fraud, shall not be made the instrument of shielding, protecting or aiding the party who relies upon it in the perpetration of a fraud or in the consummation of a fraudulent scheme."' [Citations.]" (Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 30.) Neither the second amended petition nor the first amended cross-petition was barred because Geraldine was not entitled to assert the statute of frauds to defend her alleged scheme.
C. Standing
The probate court struck the cross-petition on the alternate ground that it should have been pursued in Margaret's estate. Initially, it must be noted there are no allegations the property was being held by Margaret for the benefit of Margaret's heirs. Also, the petition does not allege that the property was conveyed by Margaret to Geraldine for the benefit of Margaret's heirs. Rather, Margaret allegedly only held title to the property in trust for the heirs of Annie Mae's estate for distribution at the appropriate time.
The fact that Margaret conveyed title to herself and Geraldine did not defeat Annie Mae's heirs' interest in the Victorville property as a matter of law. Rather, assuming the allegations are true, a conveyance from Margaret to Geraldine would give legal title to Geraldine but create a constructive trust by operation of law to Annie Mae's heirs. (See Earle v. Bryant (1910) 12 Cal.App. 553, 556 [party holding title to land for the benefit of the heirs decedent's estate holds title under a constructive trust by operation of law].) This is because initially Margaret and subsequently Geraldine were merely involuntary trustees of the Victorville property for Annie Mae's heirs. (See Atwood v. Elwood (1955) 132 Cal.App.2d 761, 767-768 [husband, who was the last survivor of a group of people holding title to property, was given title to property for ease of management was an "involuntary trustee" for the rightful owners (the group's heirs); as a result, subsequent conveyance to his wife made her an "involuntary trustee" for the heirs' interests in the property].)
Randy sought to quiet title and to have a constructive trust imposed on the Victorville property as an heir of his grandmother's estate. Section 9654 provides: "The heirs or devisees may themselves, or jointly with the personal representative, maintain an action for possession of property or to quiet title to property against any person except the personal representative." This statute allows an heir or beneficiary to bring an action to quiet title.
Furthermore, an action to impose a constructive trust is in effect an action for possession of property under section 9654. (Olson v. Toy (1996) 46 Cal.App.4th 818, 822.) An heir or a beneficiary under a will is entitled to bring an action to impose a constructive trust. (Ibid.)
In addition, Randy petitioned the court for distribution of the estate in accordance with Annie Mae's wishes as expressed through the probated will. (See Bohn v. Smith (1967) 252 Cal.App.2d 678, 682 [probate court is appropriate forum for determining an interest in property of decedent's estate based on claims of heirs at law by intestacy or as a beneficiary of a will].) "[A]ny person claiming to be a beneficiary of or entitled to distribution of a share of the estate, may file a petition for a court determination of the persons entitled to distribution of the decedent's estate." (§ 11700.) Section 48 defines an interested person as an heir, devisee or beneficiary or any other person having a property right in the estate of the decedent which may be affected by the proceeding.
The cross-petition contained allegations sufficient to withstand the motion to strike. It alleged Margaret initially acquired title to the Victorville property as part of Annie Mae's testamentary intent that it would be distributed to Annie Mae's heirs. When Annie Mae died, Margaret did not distribute the property but conveyed title to herself and Geraldine as joint tenants in 1985. The 1985 conveyance between the two sisters was subject to an oral agreement that the property would be distributed to Annie Mae's heirs at the appropriate time. Geraldine reneged on the agreement with Margaret following Margaret's death.
Under the circumstances, Randy correctly pursued his claims in Annie Mae's estate. The probate court erred in concluding the issues were best resolved in Margaret's estate.
IV. DISPOSITION
The orders dismissing the section Probate Code 9654 petition and striking the cross-complaint are reversed. Petitioner, Randy Taylor, as the trustee of the estate of Annie Mae Austin, is to recover his costs incurred on appeal from Respondent, Geraldine Carr.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
KRIEGLER, J. ARMSTRONG, Acting P. J.
I concur in my colleagues' conclusion that the petitions - just barely - state a cause of action for a constructive trust. Most of the allegations of the petitions - that Annie Mae was "under the mistaken impression that spouses of her children would be entitled to distributions from her estate," that she deeded her property to Margaret and Herndon to "enable her nine children to eventually share equally in the ownership of her properties," that "[i]t was always the understanding of the family members that the properties were to be divided into nine equal shares," that Margaret "has stated that she and her sister Geraldine Carr held title to the properties . . . in trust for the benefit of the children," and similar statements, are irrelevant to this proceeding, as they do not state a cause of action entitling petitioner to relief. The only allegation which prevents this court from affirming the lower court's order is that Geraldine agreed with Margaret to hold title to the properties at issue for the benefit of Annie Mae's heirs.
As respondent argued in the trial court, in order to win relief the petitioner must overcome problems with the statute of frauds, the statute of limitations, and laches, among others. Additional issues are manifest, such as whether an express trust can be created when the trustee is to hold the property "until such time as it was appropriate to distribute said properties to the rest of the family members."
But the looming issue in the case is one of proof. As the trial court stated with respect to the question of the existence of an agreement to reconvey the properties: "Who is going to testify to that? How are you going to prove that?" Petitioner's attorney answered that "we have percipient witness evidence of family members as to Margaret Taylor's state of mind." Putting aside the obvious hearsay problems, Margaret's state of mind does not establish a contract. Petitioner needs evidence of Geraldine's oral agreement to hold the properties in trust, and the only admissible evidence referred to in the record - Geraldine's testimony - is that Geraldine did not agree to hold the properties in trust.
I appreciate that, on a demurrer, we are not concerned with difficulties of proof. However, I feel compelled to point out that, on a motion for summary judgment, petitioner will be required to present evidence to overcome the "form of title" presumption contained in Evidence Code section 662: "The owner of the legal title to property is presumed to be the owner of the full beneficial title. This presumption may be rebutted only by clear and convincing proof." None of the allegations in the many pleadings filed in this case contains any reference to admissible evidence which would meet petitioner's burden to overcome the presumption.
ARMSTRONG, Acting P. J.