Markowitz v. Markowitz (In re Markowitz 1998 Tr.)

In re THE DAVID AND ROSE MARKOWITZ 1998 TRUST, Dated JUNE 2, 1998;

JOSEPH MARKOWITZ, Petitioner and Appellant, v. SAUL MARKOWITZ, et al., Respondents.

B297630

California Court of Appeals, Second District, Fourth Division

August 25, 2021

NOT TO BE PUBLISHED

APPEAL from a judgment of the Superior Court of Los Angeles County No. 17STPB08890, Gus T. May, Judge. Affirmed.

Posner Law Corporation and Ashley D. Posner for Petitioner and Appellant.

Marcus, Watanabe & Enowitz, David M. Marcus and Daniel J Enowitz for Respondent Saul Markowitz.

Buley Law and Michael J. Buley for Respondent Philip Markowitz.

WILLHITE, J.

This action is the latest in an ongoing dispute between members of the Markowitz family. The background of the underlying controversy is factually and procedurally complex, involving the strained relationship of and litigation between several family members in their struggle over the family's fortune. The issue on appeal, however, is straightforward. Joseph Markowitz appeals from an order granting his brothers' motions for sanctions, made pursuant to Code of Civil Procedure section 128.7, ^[1] dismissing this action and imposing monetary sanctions of $12, 145, jointly and severally against Joseph and his attorneys. We conclude the trial court acted well within its discretion in imposing sanctions and affirm.

FACTUAL AND PROCEDURAL BACKGROUND

The Markowitz Family and the Markowitz Trust

David and Rose Markowitz (David and Rose, respectively) had three sons: petitioner and appellant Joseph Markowitz (Joseph), and respondents Saul Markowitz (Saul), and Philip Markowitz (Philip).^[2] In June 1998, David and Rose established the David and Rose Markowitz 1998 Trust (Markowitz Trust) and named themselves co-trustees. The Markowitz Trust provides that, in the event of the incapacitation or death of David or Rose, the survivor shall act as sole trustee of three sub-trusts (i.e., Trusts A, B and C).

The Markowitz Trust contained 100 percent community property and was composed of bank accounts and several parcels of real property, with a collective value of at least $10 million. The real property included the family home at 318 North California Street, Burbank, California (Burbank property) and apartment buildings at 9311-9333 and 9339-9345 Sepulveda Boulevard, North Hills, California (Sepulveda property) and 610-614 East Chevy Chase Drive, Glendale, California (Chevy Chase property).^[3]

The Markowitz Trust provides that upon the death of the first spouse, 50 percent of the community assets are to be segregated into two irrevocable trusts (Trusts B and C), with the surviving spouse's 50 percent share of the community assets remaining in a revocable trust (Trust A) until his or her death, at which point Trust A's assets are subject to federal estate taxes. As for Trusts B and C, the Markowitz Trust states: “Decedent's Marital Share shall consist of one-half (1/2) interest in the Joint Property of the Trust Estate, and the Separate Property of the Decedent Settlor. Decedent's Marital Share shall be divided into the Decedent's Trust B and Trust C. Upon creation of such Trust shares, Decedent's Trust B and Trust C are irrevocable. [¶] The Trustee shall have sole discretion to select that portion of the joint assets which shall be included in the Marital Share (Decedent's Trust B and Trust C).”

The Markowitz Trust also provided that upon the death of David and Rose and prior to distribution of the trust estate “the following gifts shall be made outright and free of trust: [Joseph] shall receive the [Sepulveda Property]... [and Saul] shall receive the [Burbank property] and the [Chevy Chase property].”

Initially Joseph and Saul were designated as 50 percent beneficiaries of the Markowitz Trust. After David died in July 2006, Rose became the sole trustee.

Amendments, Restatements and Revocation of The Markowitz Trust

Between the time of David's death and January 2014, Rose executed several amendments to the Markowitz Trust. On January 6, 2014, Rose revoked her prior amendments to and restatements of the Markowitz Trust and reaffirmed a May 15, 2009, Second Amendment and Restatement of the Markowitz Trust.

Two days later, on January 8, 2014, Rose executed a Third Restatement of the Markowitz Trust, revoking prior dispositive provisions and amendments (dated May 15, 2009, and January 6, 2014), and designating an (unnamed) conservator as her sole successor trustee. That same date, Rose executed a notarized affidavit stating that Joseph and Philip each had subjected her to significant pressure regarding her estate, and that Philip had been disinherited. Rose further stated that, due to “tremendous friction between them, ” neither Saul nor Joseph could serve as successor trustee as Rose feared “they would never be able to be fair to one another.” Rose expressed her wish to “place [her] estate under conservatorship because [she was] reaching the point where [she could not] take any more pressure from [her] sons relative to [her] estate and reaching the point where [she was] not able to resist pressure from them.” Specifically, Rose “want[ed] a conservatorship of [her] estate because: [¶]... [She was] afraid [she would] be pressured to make more amendments and [she] want[ed] the protection of the court[, ]” and she “believe[d she was] unable to manage [her] trust or [her] husband's irrevocable trusts with all of the pressure [she was] getting from [her] sons to use the money for their current benefit rather than [her] own.” Rose did not identify a nominee to serve as conservator of her estate.

On December 23, 2014, Rose revoked the Markowitz Trust.

No conservator was appointed prior to Rose's death on November 9, 2017.

Previous Litigation

The record reflects that Rose had reason for concern that friction between her sons would prevent them from dealing fairly with one another with regard to the distribution of their parents' estate.

A. The Initial Probate Action and Rose's Revocation of Trust A

On November 20, 2014, two weeks after Rose disinherited him, Joseph filed a probate action, In The Matter of The David and Rose Markowitz 1998 Trust Dated June 2, 1998, LASC case No. BP151036 (Initial Probate Action), against Saul and Rose seeking, among other things, to remove Saul as trustee of Trust A.

On December 23, 2014, Rose revoked the Markowitz Trust.

Notwithstanding Rose's revocation of Trust A, on March 30, 2015, Joseph filed a first amended petition in the Initial Probate Action.

On October 20, 2016, Rose filed a “Response... to [Joseph's] Supplemental Pleading To Clear Probate Notes, ” arguing that: “Probate Note ‘C' requires a showing of [Joseph's] standing to bring [the Initial Probate Action] because it is undisputed that [Rose] retained the power to revoke the trust and did so. The note asks [Joseph] to make a showing (beyond mere pleading) regarding [Rose's] competency to revoke the trust. The papers before the court indicate that [Joseph] has not cleared this note.”

On November 1, 2016, the probate court dismissed the Initial Probate Action based on its conclusion that Rose's revocation of Trust A meant Joseph lacked standing to bring the Initial Probate Action. Joseph filed an unsuccessful motion for reconsideration. (§ 1008.)

B. The Elder Abuse Action

On October 16, 2014, in his capacity as Rose's attorney-in-fact, Saul filed a complaint for financial elder abuse against Joseph (LASC case No. BC560982; the Elder Abuse Action). Saul alleged that Joseph had engaged in a pattern of harassment of Rose, which included Joseph phoning Rose 50 to 100 times per day to demand money and Joseph's having taken control of Rose's checkbook to write checks in excess of $125, 000 for his personal benefit or to himself.

Following a bench trial, the court found that Joseph engaged in a campaign of harassment by, among other things, calling his mother dozens of times per day to demand money and, when Rose refused to accede to his demands, telling her she “deserved” to die. The court awarded Saul $100, 000. Joseph appealed, and our colleagues in Division Two affirmed the judgment. (See Markowitz v. Markowitz (May 3, 2018, B278585) [nonpub. opn.] 2018 WL 2056481.)

The Instant Litigation

A. The Initial Petition

On October 3, 2017, Joseph filed a verified petition in this action. Although Rose was then still alive, Joseph sued both his brothers in his “capacity as successor trustee” of Trusts B and C.

B. The First Amended Petition

On January 23, 2018, before his brothers responded to the petition, Joseph filed a verified First Amended Petition (FAP). The FAP was accompanied by the same exhibits and was identical to the initial petition, except the FAP contained information that Rose died in November 2017.^[4] The FAP alleged four causes of action by which Joseph sought to (1) quiet title against Saul's claims of ownership of the Burbank Property; (2) compel Saul to return unspecified cash, stocks, bonds and other personal property Saul allegedly had wrongfully seized; (3) compel Philip to deliver unspecified cash, stocks, bonds and other personal property he allegedly had wrongfully seized; and (4) obtain reimbursement for attorney fees and costs incurred in connection with the FAP.

Saul demurred to the FAP. He argued that no viable claim for relief had been pled against him. He also argued that each of Joseph's claims was barred by the doctrines of res judicata and collateral estoppel, and by Joseph's failure to raise his claims in a compulsory cross-complaint in the Elder Abuse Action.^[5]

The trial court overruled Saul's demurrer to the first cause of action for return of real property to the Trust on the ground that Saul failed to produce judicially noticeable evidence contradicting Joseph's...