Ashlock v. Carlson (In re Estate of Ashlock)

45 Cal.App.5th 1066

259 Cal.Rptr.3d 322

ESTATE OF Lonnie Lamont ASHLOCK, Deceased.

Gabriel Ashlock, as Administrator, etc., Plaintiff and Respondent,

v.Stacey Carlson, Defendant and Appellant.

Estate of Lonnie Lamont Ashlock, Deceased.

Stacey Carlson, as Executor, etc., Petitioner and Appellant,

v.Gabriel Ashlock, Objector and Respondent.

Gabriel Ashlock, Plaintiff and Respondent,

v.Stacey Carlson, as Trustee, etc., Defendant and Appellant.

F078083

Court of Appeal, Fifth District, California.

Filed March 3, 2020

Certified for Partial Publication.^*

Crabtree Schmidt, and Robert W. Crabtree, Modesto, for Defendant and Appellant.

Schofield & Associates, Louis F. Schofield, San Ramon; Freeman Firm, Thomas H. Keeling, Stockton, and Franklin J. Brummett for Plaintiff and Respondent.

PEÑA, J.

This is the third appeal in a consolidated probate matter involving Stacey Carlson (Stacey) and Gabriel Ashlock (Gabriel), both of whom claimed entitlement to the estate of Gabriel's deceased father. We previously affirmed a judgment on the merits of a trust dispute, a will contest, and claims against Stacey for breach of fiduciary duty and financial abuse of a dependent adult. ( Estate of Ashlock (Mar. 14, 2019, F074969) 2019 WL 1219565 [nonpub. opn.] ( Ashlock I ).) We later affirmed an award of attorney fees. ( Estate of Ashlock (May 3, 2019, F076941) 2019 WL 1975342 [nonpub. opn.] ( Ashlock II ).)

Stacey now appeals from a judgment entered in a bifurcated proceeding on issues of damages and remedies. The monetary portion of the judgment exceeds $11 million. Stacey was found liable under Probate Code section 859, which imposes a penalty of "twice the value of the property recovered" in certain actions brought under section 850 et seq. (All undesignated statutory references are to the Probate Code.) Among other contentions, Stacey argues the trial court misinterpreted the quoted language and awarded "triple" damages rather than "double damages." We resolve the issue of statutory interpretation in the published part of the opinion. The remaining claims challenge the sufficiency of the evidence.

Multiple parcels of real property, collectively valued at $5,148,000, were recovered by the decedent's estate pursuant to section 850 et seq. The trial court found the properties had been misappropriated in bad faith and thus imposed a penalty of $10,296,000. We conclude this figure was correctly calculated under section 859.

Stacey was also surcharged approximately $838,777 for misappropriating cash and personal property. Based on a finding of bad faith, she was held liable under section 859 for an additional penalty of approximately $1,677,554. Stacey alleges the evidence is insufficient to support any of the surcharges.

We disagree with all but one of Stacey's contentions. She has identified the miscalculation of a surcharge for a series of financial transactions in March 2014, and the error impacts her total liability under section 859. The nature of the error precludes us from modifying the judgment ourselves. Therefore, we affirm in part, reverse in part, and remand for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

We take judicial notice of the records and opinions in Ashlock I and Ashlock II , and we incorporate by reference our earlier summaries of the factual and procedural background. In addition, Gabriel's unopposed request for judicial notice of the remittitur issued in Ashlock I is hereby granted. ( Evid. Code, §§ 452, subds. (a), (d), 459.) As previously explained, decedent Lonnie Lamont Ashlock (Lonnie) passed away in October 2013. Soon afterwards, Gabriel and Stacey became embroiled in litigation over Lonnie's estate.

Stacey petitioned to admit into probate a will signed by Lonnie in 2009. Gabriel opposed the petition on multiple grounds, including the fact Stacey had drafted the will and named herself the sole beneficiary. Gabriel also filed a petition challenging the validity of multiple trust instruments, which Stacey had drafted and executed on Lonnie's behalf in 2013. The will contest and trust petition were consolidated with other matters not relevant to this appeal.

The trust petition requested relief under section 850 et seq., including the return of 18 parcels of real property to Lonnie's estate. One of those properties, the "Snelling Ranch," contained approximately 190 acres of income-producing almond trees. The petition alleged Stacey's various actions constituted "[w]rongful [t]aking" within the meaning of section 859 and claimed the petitioner, Gabriel, was "entitled to ‘twice the value of the property recovered' in addition to any other remedies available in law."

A 53-day bench trial was conducted between November 2014 and February 2016. The final 13 days of trial were devoted to accounting issues. Stacey was ordered to account for all actions taken under her power of attorney, which Lonnie had granted to her in 2005. She was also ordered to account for "all activities/transactions taken pursuant to the ‘partnerships’ " she had allegedly entered into with Lonnie in 2009, namely, "Little Hills Ranch" and "Investwest Properties." The so-called "accounting phase" included expert witness testimony by certified public accountants.

On October 25, 2016, the trial court entered its "Interim Judgment" on the will contest and trust petition, which incorporated by reference a lengthy statement of decision. Lonnie was found to have been suffering from dementia as of "approximately the middle of 2008," and, from "that point onward," to have "lacked capacity to enter contracts and sign testamentary documents." Accordingly, and for independent reasons under former section 21350, the 2009 will was ruled invalid.

Relevant to this appeal, the Ashlock I judgment included findings that Stacey had forged documents purporting to show the creation, in 2009, of the Little Hills Ranch and Investwest Properties partnerships. The alleged partnerships were found to have never existed. Moreover, Stacey was found to have committed "fraud in the setting up of the ‘partnerships.’ "

The validity of the partnerships was an important issue in relation to the claims under section 850 et seq. Stacey had used her power of attorney to transfer title to most of Lonnie's real estate into the name of Investwest Properties. She then deeded Lonnie's properties into the 2013 trusts. The "sham" partnerships, which is how the trial court described them, added a layer of protection against any legal challenges to Stacey's taking of the real estate portfolio and other property. During trial, she conceded the trusts were invalid but argued 14 of the 18 properties were partnership assets and did not belong to the estate. One of the other four properties was the Snelling Ranch, which Stacey similarly alleged was "subject to the effects of the partnership with [her]." She thus relied on the partnership defense to justify the comingling of income from the Snelling Ranch with money in her own bank account.

As part of the Ashlock I judgment, the trial court imposed a constructive trust on all properties that had been transferred into the invalidated trusts. It also surcharged Stacey a total of $365,152.92 for the use of estate funds to pay for her legal expenses and the expenses of third parties. The trial court reserved jurisdiction to resolve additional issues, including the amount of "damages" to which Gabriel was entitled under section 859 and other statutes.

In December 2016, Stacey filed her notice of appeal in Ashlock I . While the appeal was pending, the parties continued to litigate other matters in the consolidated action. It appears the damages and remedies phase consisted of briefing and written objections, with the parties basing their arguments on evidence presented during the initial 53 days of trial.

On March 19, 2018, the trial court issued its "Second Statement of Decision Regarding Issues of Accounting and Damages." (Some capitalization omitted.) The parties subsequently filed objections thereto. On July 13, 2018, the trial court issued two minute orders. The minute orders contained rulings on the objections and indicated the statement of decision would be modified accordingly. On the same date, the trial court issued its "Interim Judgment 2 on Second Amended Statement of Decision" (the judgment), i.e., the judgment from which the current appeal is taken.¹

Although Gabriel had argued for surcharges in excess of $3.8 million, the trial court denied most of his claims. As detailed in our Discussion, post , it imposed five surcharges against Stacey totaling $473,624.20. That amount was added to the surcharges of $365,152.92 in Ashlock I to determine the penalty under section 859, which was calculated to be $1,677,554.20. Gabriel accurately notes the trial court's calculation was off by four cents ($365,152.92 + $473,624.20 = $838,777.12. $838,777.12 × 2 = $1,677,554.24). The penalty was increased by $10,296,000, which represented twice the value of the 18 parcels of real estate. Therefore, Stacey's total liability under section 859 was determined to be $11,973,554.20.

DISCUSSION

I.-IV.^**

V. Liability Under Section 859

A. Statutory Interpretation

Section 850 et seq. "provides a mechanism for court determination of rights in property claimed to belong to a decedent or another person." ( Estate of Young (2008) 160 Cal.App.4th 62, 75, 72 Cal.Rptr.3d 520.) Section 850 allows specified persons to file a petition to obtain such a determination. (Id. , subd. (a).) Sections 851 through 855 provide most of the procedural rules.

If a petitioner establishes the right to property held by another party, the petitioner may recover the property under section 856. The statute provides: "[I]f the court is satisfied that a conveyance, transfer, or other order should be made, the court shall make an order authorizing and directing the personal representative or other fiduciary, or the person having title to or possession of the property, to execute a conveyance or...