Asaro v. Maniscalco

323 Cal.Rptr.3d 275

Anthony ASARO, Plaintiff and Respondent,

v.Jon Joseph MANISCALCO et al., Defendants and Appellants.

D080874 (Consolidated with D081481)

Court of Appeal, Fourth District, Division 1.

Filed July 12, 2024

Certified for Partial Publication.^*

CONSOLIDATED APPEALS from judgments of the Superior Court of San Diego County, Robert C. Longstreth, Judge. Affirmed. (Super. Ct. No. 37-2015-00034908-PR-TR-CTL)

Van Dyke & Associates, Richard S. Van Dyke, and Geoffrey J. Farwell, San Diego, for Defendants and Appellants Jon Maniscalco and Michael Maniscalco.

Law Office of Christine Rister and Christine M. Rister; Stratege Law and J. Scott Scheper for Defendants and Appellants Matteo Giacalone and Madelyn Giacalone.

Higgs Fletcher & Mack, John Morris, Roland A. Achtel, Scott Ingold, and Steven M. Brunolli, San Diego, for Plaintiff and Respondent Anthony Asaro.

DATO, Acting P. J.

This litigation arises out of the family trust of Nicola and Antoinette Giacalone, who are both deceased.¹ The parties to the litigation are various beneficiaries and/or former trustees of the family trust. Anthony Asaro, a trust beneficiary, prevailed on his petition, which alleged wrongdoing by two sets of successive cotrustees.

Jon Maniscalco, a former trustee and beneficiary, appeals the resolution of Asaro’s claims against him for breach of fiduciary duties owed to the trust and financial elder abuse of Antoinette. He argues: (1) Asaro lacked standing to assert his claims; (2) Asaro’s claims were time-barred; (3) Asaro’s claims were released pursuant to a settlement agreement between Jon and the then-trustees, including Nicola; (4) Asaro’s elder abuse claims were not supported by substantial evidence; and (5) the court improperly calculated damages under Probate Code ² section 859 and improperly awarded those damages to Asaro individually. We find no reversible error and affirm.³

FACTUAL AND PROCEDURAL BACKGROUND

A. The Giacalone Family Trust and Community Property Agreement

Nicola and Antoinette were married in 1953. In 1985, they created the Giacalone Family Trust (the Trust) that is the subject of this dispute, designating themselves as cotrustees. They simultaneously executed a "Community Property Agreement" that provided, except as to a small number of enumerated assets,

"[A]ll property acquired by either or both [h]usband and [w]ife since the date of their marriage, whether before or after the date of this Agreement and regardless of the form of title by which such property was acquired, was then held, is presently held, or shall be held, and all rents, issues and profits from such property, shall be the community property of husband and wife."

In 2005, Nicola and Antoinette assigned to the Trust "all of their right, title, and interest in and to all of the assets owned by either of them that would otherwise be subject to a probate proceeding on the death of either spouse."

Under the terms of the Trust, which was restated entirely in 2005, when the first spouse died, the Trust was to be divided into a "Survivor’s Trust" and an irrevocable "Residual Trust." The Survivor’s Trust would consist of the surviving spouse’s one-half share of community property, plus all of that spouse’s separate property. The Residual Trust would contain the balance, comprising the deceased spouse’s one-half interest in the community property. Both Asaro and Jon are beneficiaries of the Residual Trust.

B. Jon's Term as Nicola's Fiduciary and Cotrustee

In April 2009, Nicola appointed his nephew Jon as his "attorney-in-fact" with broad powers over his assets. He also named Jon successor trustee, to take effect upon Nicola’s "resignation, death or incapacity." By that point, Antoinette’s Alzheimer’s disease had rendered her incapacitated under the terms of the Trust and incapable of managing her financial affairs.

In January 2010, Jon and Nicola cashed out a certificate of deposit (CD) worth $200,019.17 from an account held by Nicola and Antoinette. The cashier’s check was payable to both Jon and Nicola. In February 2010, Jon alone cashed out a second CD, worth $230,000, held by Nicola and Antoinette at a different bank. This cashier’s check was payable solely to Jon. Jon deposited both checks to a joint account he held with Nicola. All of the funds in that joint account were ultimately transferred to Jon or his family members.

In April 2010, Jon transferred a $970,000 brokerage account held by the Trust to a joint account with Nicola. In September 2010, Jon executed an unsecured promissory note for $970,000, payable to Nicola individually, which was to be repaid after 15 years or forgiven after Nicola (then 84) died. Jon then transferred the money through a series of different joint accounts with Nicola before finally transferring all of it to himself and his wife in April 2011.

In September 2010, Nicola conveyed a property on Adams Avenue (the Adams Avenue Property) from the Trust to Jon’s real estate company. Jon executed a promissory note for $196,000, payable to Nicola individually to be repaid after 15 years or forgiven after Nicola’s death. Jon did not have the property appraised before drafting this note, but evidence at trial showed that its value was $261,000.

In November 2010, Nicola executed a sixth amendment to the Trust, formally appointing Jon as cotrustee. In the same amendment, Jon and Nicola removed Asaro as a beneficiary of the Residual Trust. In this action, the trial court held that the removal of Asaro as a beneficiary of the Residual Trust was invalid and that Jon "fraudulently obtained [the] Sixth Amendment." Jon does not challenge those findings on appeal.

Antoinette died in late November. According to her will, her entire estate was to pass to the Trust. Jon and Nicola did not inform the beneficiaries that the Residual Trust had become irrevocable on Antoinette’s death. (See § 16061.7 [trustees shall serve a notification to beneficiaries and heirs within 60 days "when a revocable trust or any portion thereof becomes irrevocable"].) Nor did Jon and Nicola divide the Trust estate between the Residual Trust and the Survivor’s Trust within six months of Antoinette’s death, as called for by the terms of the Trust.

The Trust paid Jon $5,000 a month in "co-trustee fees" from April 2010 to May 2011, and $30,000 in "real estate" fees in late 2010. Jon, his wife, and his brother Michael also received $5,000 to $10,000 nearly every month from Nicola during this period, purportedly as "gifts."

C. Jon's Petitions and the 2011 Settlement

By May 2011, Nicola suspected Jon was stealing. As a result, he revoked Jon’s power of attorney and removed him as cotrustee. Nicola then appointed his nephew Matteo and Matteo’s wife Madelyn as cotrustees and gave Matteo durable power of attorney.

In July 2011, Jon filed petitions to remove Madelyn and Matteo as cotrustees and to have a conservator appointed for Nicola on the grounds that Nicola was "increasingly confused about the nature of his assets" and that Matteo and Madelyn were "not capable of protecting the [Trust] beneficiaries." Nicola objected to both petitions, alleging that Jon had misappropriated assets. He submitted statements from two physicians who both reported that he had significant cognitive impairment, including moderate dementia, but nonetheless concluded that he had sufficient capacity to continue to manage his own finances. The court-appointed conservatorship investigator, however, recommended the appointment of a third-party conservator and guardian ad litem in light of Nicola’s cognitive deficits.

In October 2011, Jon, Nicola, Madelyn, and Matteo participated in a one-day mediation. Nicola did not attend the mediation but, according to Matteo, was consulted telephonically. The parties agreed to settle Jon’s petitions and to. a broad release of claims related to his administration of the Trust (the Settlement Agreement). As part of the settlement, Jon dismissed his conservatorship petition, withdrew his objection to Madelyn and Matteo serving as trustees, and agreed to repay $970,000 that originated in the Trust-held brokerage account. Jon was permitted to keep other assets, including the Adams Avenue Property and the CD funds.

D. Nicola Dies and This Litigation Begins

Nicola died in 2016. In 2017, Jon filed a joint petition against Matteo and Madelyn for alleged breaches of fiduciary duty. In 2018, Asaro filed his own petition asserting claims for breach of fiduciary duty against Madelyn and Matteo; breach of fiduciary duty against Jon; elder abuse by Jon (on behalf of Antoinette and Nicola); and return of trust property from Jon, Madelyn, and Matteo. Asaro amended his petition in 2019.

In 2020, the trial court ruled that the $970,000 paid by Jon in connection with the settlement was community property and thus one-half needed to be returned to the Residual Trust as Antoinette’s share of the asset. This court affirmed, concluding substantial evidence supported the probate court’s finding. (Asaro v. Giacalone (July 15, 2021, D077596) [nonpub. opn.].)

After remand, the probate court held an eight-day trial on the parties’ remaining claims. It ultimately issued a statement of decision in favor of Asaro, ruling against Jon and the Giacalones.

With respect to Asaro’s claims against Jon, the court held that Jon breached his fiduciary duties to the Trust and committed financial elder abuse against Antoinette by: (1) "improperly converting and misappropriating $430,000 in Certificates of Deposit owned by Nicola and Antoinette to himself"; (2) "improperly converting and misappropriating the Adams Avenue [Property to himself in exchange for a doctored promissory note that was all but worthless to Nicola and Antoinette"; and (3) transferring "money to himself from Nicola and Antoinette’s accounts for alleged professional and trustee fees." The court required Jon to reimburse the Residual Trust for $547,370, which included 50 percent of the value of the misappropriated property plus ...