Showing posts with label Financial Exploitation of the Elderly. Show all posts
Showing posts with label Financial Exploitation of the Elderly. Show all posts
Sunday, November 16, 2008
CALIFORNIA ELDER ABUSE CASE - undue influence and fraud
Filed 5/18/05
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION ONE
SUSAN DAVID, Plaintiff and Respondent, v. WENDY ALTER HERMANN, Individually and as Successor Trustee, etc., Defendant and Appellant. | A101681, A104110, A104111, and A104693 (Marin County Super. Ct. No. PR000851) |
This is an appeal from a judgment adjudicating a trust to be invalid on the ground of undue influence and fraud and from post-judgment orders concerning attorney fees. We reverse the portions of the judgment and the orders relating to attorney fees and otherwise affirm.
FACTUAL AND PROCEDURAL BACKGROUND
The litigation arises from a history of disputes between the daughters of Zal and Jane Alter, both now deceased. The petitioner, Susan David (hereafter Susan), is the older daughter; the defendant, Wendy Alter Herman (hereafter Wendy), is the younger. The property at issue consists primarily of the family business, the 300 Company, which owns and manages a commercial building at 300 Brannan and an apartment building at Hayes and Divisidero both in San Francisco. In recounting the factual background, we will rely on the trial court’s lengthy and detailed statement of decision.
On January 31, 1989, Zal and Jane Alter created a revocable living trust, called the Alter Family Trust, as part of an estate plan recommended by their attorney. The complex trust provisions effectively called for equal distribution of the trust assets between their daughters on their death. Zal Alter was the sole trustee, but he was then experiencing declining health and mental ability. Sometime in 1989, Susan began to assist Zal in writing checks, paying taxes, balancing accounts, and managing the 300 Company. Later in 1990, she began to sign checks with her father’s approval and to assume control of the trust estate. On September 17, 1990, Zal suffered a fall and became entirely incapacitated.
The year 1990 brought changes in the lives of other members of the family. Recently divorced, Wendy moved from Fresno to Marin County where she still resides. Jane separated from Zal after 50 years of marriage and began to live alone in a condominium in San Francisco. While undertaking this difficult transition, Jane was experiencing declining health and failing eyesight. Wendy began to see her mother frequently and assisted her in the tasks of daily living.
In August 1990, the strained relations between the two daughters experienced a serious rift. As advised earlier by his estate planning attorney, Zal decided to make a series of gifts to his family in the amount of the gift tax exemption. Susan wrote the checks on his behalf. Zal gave $20,000 to each of his daughters and $10,000 to each of his four grandchildren and, in addition, gave $10,000 to Susan’s husband. The effect was a $10,000 imbalance in favor of Susan’s side of the family. Wendy complained to Jane and contacted her parents’ attorneys. She scheduled a meeting with the firm on October 4, 1990, a day before Susan was scheduled to leave for a three-week vacation in Europe. When Susan returned from the vacation, she learned from her father’s business partner that Wendy was accusing her of dereliction in the management of the family’s financial affairs.
On March 5, 1991, Jane revoked her interest in the Alter Family Trust. The same day, she executed a will by which she disposed of her separate property and her share of the community property, “including all [her] former trust property,” which she held with her husband. She gave half the residue of her estate in equal shares to Wendy and the other half to the “then-living issue” of Susan. The will explicitly omitted to provide directly for Susan and appointed Wendy as executor of her estate.
In April 1991, Wendy and Jane filed a petition in San Francisco Superior Court for an accounting and for removal of the trustee of the Alter Family Trust and appointment of a successor trustee. The petition alleged that Zal suffered from senile dementia and that the trust instrument provided that Jane, Susan, and Wendy would serve as co-trustees in the event of his incapacity. It alleged that Susan had unilaterally taken control of trust affairs, made unauthorized gifts of trust assets, improperly paid herself compensation for her duties as trustee, and failed to pay for Zal’s necessary expenses.
Concurrently with filing the petition, the parties stipulated to appointment of a trust company as the successor trustee. When the trust company declined the appointment, the parties stipulated to the appointment of an independent fiduciary, Debra Dolch, as successor trustee by an order filed July 17, 1991. The order provided for the equalization of gifts by an additional $10,000 gift to Wendy.
In further probate proceedings on the same petition, Susan filed two accounts and reports covering the period of September 17, 1990, to September 11, 1991. By a stipulation and order filed August 11, 1992, the court approved the accounting “as filed and all of her actions in connection with [The Alter Family Trust] as reported therein, . . . are confirmed and approved.”
In an order filed January 4, 1993, the court approved the first account and report as amended of the successor trustee, Debra Dolch, and directed her to petition for the establishment of a conservatorship for Zal and to seek instructions as to the transmutation of Zal and Jane’s shares in the Alter Family Trust into their separate property. Dolch petitioned for instructions as directed and the matter came up for a hearing on April 27, 1993, in which Zal, Jane, and the trustee were separately represented by counsel. With the agreement of the attorneys present, the court adopted an order filed June 17, 1993, that went well beyond the objective of the original petition and directed inter alia that Zal’s share of the trust assets would remain in the existing trust and Jane’s equal share would be transferred to a new trust designated the Jane Alter Living Trust.
The Jane Alter Living Trust, which was executed on June 8, 1993, named Wendy as trustee. It provided that if Zal predeceased Jane, the trust assets would be distributed one-half to Wendy and one-half in equal shares to her four grandchildren. The effect was to restrict the distribution to Susan’s children to one-fourth of the estate. In the event Zal was still living on Jane’s death, the trust provided that half of the assets would be held in a terminable interest trust (Q-TIP trust) for the benefit of Zal during his life.
Concurrently with creation of the Jane Alter Living Trust, Jane made a will disposing of all property that might not have been transferred to the trust and seeking to exercise a power of appointment in the Alter Family Trust, conditional upon a determination that the power of appointment was still effective. On November 20, 1996, she executed a first codicil to her will that again sought to exercise the power of appointment in the Alter Family Trust.
Zal died on June 9, 1995. Since separating from Zal, Jane had also suffered a progressive decline in her physical and mental condition. She walked with difficulty and was slowly going deaf and blind. The trial court found that she began to suffer from a degree of cognitive impairment that impeded her ability to review records, reason abstractly, or make sound judgments. With her declining physical and mental capacities, Jane became increasingly dependent on Wendy. The trial court found, “for example, that Wendy drove Jane to attorneys’ offices, banks and medical appointments, among other things. . . . Wendy was trustee of the Jane Alter Trust and, as such, had control of all her assets, handled all her financial affairs and, at least at some point between 1990 and 1995, started paying all of her bills as well.” Jane’s dependence on Wendy was accompanied by the growth of an intense and irrational anger toward Susan. As the trial court found, “[s]he had it in her mind that Susan had stolen money from the Alter Family Trust, and she would not let this notion go.”
In early November 1995, Wendy took Jane to her attorney, Sterling Ross, to have an amendment prepared for the Jane Alter Living Trust. Ross referred her to independent counsel, Marila Marshall, who drafted the document. In the trial court’s words, she was then “blind, hard of hearing, in a wheelchair and had been weakened mentally by a series of strokes. Her cognitive abilities were diminished.” On November 2, 1995, she executed a Second Amendment to the Jane Alter Living Trust, which largely excluded Susan and her family from receiving trust assets. The amended trust gave each of the four grandchildren the sum of $10,000 and provided that, if Wendy were living at the time of her death, the remaining trust estate would be distributed to her. If Wendy were not living, 75 percent of the estate would go to Wendy’s family and 25 percent to Susan’s family.
Jane died on October 23, 1997. On December 4, 1997, Wendy filed a petition for probate of Jane’s will in San Francisco Superior Court. In response, Susan filed a petition for declaratory relief seeking a determination that a contest to the admission of Jane’s will into probate would not constitute a challenge to Zal’s will or the Alter Family Trust and succeeded in obtaining a declaratory judgment to that effect. About two months later, Susan filed a contest to probate of Jane’s will. Wendy filed an answer to the contest, but the record discloses no further proceedings on the petition for probate or the will contest.
On February 22, 2000, Susan filed a petition in the Marin County Superior Court that led to the judgment here on appeal. The petition seeks an order adjudicating the Jane Alter Living Trust and the Second Amendment to the trust to be invalid on the ground of Jane’s incapacity or Wendy’s undue influence over Jane. In its statement of decision, the trial court found that, despite Jane’s declining health, the evidence did not show that she lacked competence to execute the Jane Alter Living Trust. Turning to the issue of undue influence, the court declined to apply a presumption of undue influence on the ground that the evidence was insufficient to support a finding that Wendy procured the documents, but, in a very thorough review of the evidence, the court still found that the allegation of undue influence had been proven. The court proceeded to also find that the dispository provisions were caused by misrepresentations of Wendy that were intended to alienate Jane from her oldest daughter. The decision declared the Jane Alter Living Trust and the Second Amendment to the trust to be void, and ordered Wendy to pay the attorney fees that Susan had incurred in the action. The court entered a judgment in the action on December 10, 2002, including attorney fees in an amount to be determined.
Susan moved for a determination of attorney fees in accordance with the judgment. On May 12, 2003, the court awarded her attorney’s fees in the sum of $180,187.50, and on July 30, 2003, the court entered an amended judgment incorporating this award of attorney fees.
Susan next took steps to enforce the judgment for attorney fees by recording an abstract of judgment and obtaining an order for a debtor’s examination. On October 8, 2003, Wendy moved for a protective order to expunge the abstract of judgment and vacate the order for a debtor’s examination. The trial court denied the motion in an order filed November 14, 2003.
Wendy has filed notices of appeal from the judgment entered on December 10, 2002; the order filed May 12, 2003, awarding attorney fees; the amended judgment filed July 30, 2003; and the order filed November 14, 2003, denying Wendy’s motion for a protective order.
A. Subject Matter Jurisdiction
As a first assignment of error, Wendy argues that the Marin County Superior Court lacked subject matter jurisdiction over Susan’s petition challenging the Jane Alter Living Trust and the Second Amendment to the trust. Susan filed the petition in reliance on Probate Code section 17005, subdivision (a)(1), which authorizes the filing of proceedings affecting a living trust to be filed in “the county where the principal place of administration of the trust is located.” It is undisputed that Wendy lives in Marin County and is the trustee of the Jane Alter Living Trust. Wendy nevertheless contends that the San Francisco Probate Court had previously assumed jurisdiction over “Jane’s property subject to her testamentary disposition, either by will or a testamentary trust, . . .” The contention requires us to examine closely two previous orders of the San Francisco Probate Court.
As noted above, in an order filed January 4, 1993, approving the first account of the successor trustee of the Alter Family Trust, the San Francisco Probate Court directed the trustee to seek instructions with respect to the transmutation of community property of Zal and Jane into their separate property. With the stipulation of counsel for Zal, Jane and the trustee, the court entered an order on June 17, 1993, that addressed not only this issue but other related issues concerning the division of the spouses’ property. In response to the original petition, the order directed that the property placed in the Alter Family Trust would remain community property and would not be transmuted into the separate property of Zal and Jane. In addition, it ordered the establishment of two separate trusts with provisions assuring fair treatment of each spouse by the other.
Specifically, the order directed Jane to establish “a fully-funded Q-TIP Trust for the benefit of [Zal] during his lifetime” in the form of an attached trust document designated the Jane Alter Living Trust. If Jane should fail to establish this trust before her death, the court would have the power to order the representative or trustee of her estate to “establish from her assets or the assets of her estate or trust the Q-TIP Trust.” Similarly, if at the time of Zal’s death, “his existing estate plan [did] not provide for [Jane] in the form and amounts set forth in the Alter Family Trust,” the court would have the power to order the representative or trustee of his estate to establish a trust “for the benefit of [Jane] during her remaining life, in an amount equivalent to the amount of the Q-TIP Trust which appears in the Alter Family Trust.” The court allowed Jane’s revocation of the Alter Family Trust conditional upon her execution of the Jane Alter Living Trust and directed that one-half of the trust assets be transferred to Zal’s conservator and one-half to the Jane Alter Living Trust.
Lastly, the order provided: “This Court shall retain jurisdiction over [Zal] and [Jane] and the assets of the Alter Family Trust to enforce this order.”
Wendy argues that her 1997 petition to probate Jane’s will “revested” the San Francisco Probate Court with jurisdiction over Jane and her assets. The peculiarity of this petition is that it solely concerned the exercise of a power of appointment in the presumably revoked Alter Family Trust. Wendy’s petition to probate Jane’s will filed December 4, 1997, stated that the estimated value of property of the estate was zero. Attachment 3c to the petition stated: “All of the decedent’s assets were held in trust or will be transferred by other means. There will be no assets in the probate estate.” The fourth paragraph of the Will of Jane Alter attached to the petition specifically referred to the power of appointment and sought to exercise it in the event the revocation of the Alter Family Trust should be determined to be legally ineffective. The First Codicil to Will of Jane Alter, which was also attached to the petition, sought solely to “confirm the exercise in my Will of the power of appointment.”
Susan contested the probate of the will on the grounds of incapacity and undue influence and on the further ground that the Alter Family Trust, which contained the power of appointment, had been revoked both by Jane and an order of the court. “Therefore, at the time of the execution of the purported will [of Jane Alter], the Trust was revoked and thus there was no document extant granting [her] said power.”
We see nothing in the order filed June 17, 1993, that would affect the jurisdiction of the Marin County Court to consider Susan’s petition challenging the Jane Alter Living Trust. The San Francisco court acted on a petition by Debra J. Dolch requesting instructions on the transmutation of community property of Zal and Jane into separate property, and with the stipulation of the parties, approved a broad settlement regulating the division of property between the spouses following Jane’s revocation of the Alter Family Trust. The court retained jurisdiction for the limited purpose of assuring that the settlement was carried out as directed. This limited reservation of jurisdiction did not conflict in any way with Susan’s petition challenging the validity of the Jane Alter Living Trust.
We also see no basis for holding that the petition to probate Jane’s will gave the San Francisco Probate Court prior exclusive jurisdiction over Jane’s trust assets that precluded later filings in another county. Such prior exclusive jurisdiction cannot be predicated on in rem jurisdiction over Jane’s estate since the petition stated that there were no assets subject to probate. The precedents cited in Wendy’s brief regarding in rem jurisdiction of the probate court over a decedent’s assets have no application in the absence of a probate estate. (Estate of Wise (1949) 34 Cal.2d 376, 382; Prob. Code, § 7051.) Similarly, the cited authority regarding the continuing and exclusive jurisdiction of the probate court presupposes an estate subject to administration. (Dungan v. Superior Court (1906) 149 Cal. 98, 100; Marsh v. Edelstein (1970) 9 Cal.App.3d 132, 142; Estate of White (1945) 69 Cal.App.2d 749, 757-758; Estate of Evans (1944) 62 Cal.App.2d 249, 256.) Again, the petition has no relevance to the court’s jurisdiction over the Jane Alter Living Trust since it was filed to exercise a power of appointment in a distinct trust, the Alter Family Trust. In the absence of the same subject matter, Wendy cannot rely on the rule that “the tribunal in which jurisdiction first attaches retains it exclusively.” (Slinack v. Superior Court (1932) 216 Cal. 99, 106; Jordan v. Clausen (1936) 13 Cal.App.2d 16, 19-20.) Finally, we see no relevance to Wendy’s discussion of testamentary trusts since the judgment at issue in this appeal concerned the validity of a living trust. (Estate of Cox (1970) 8 Cal.App.3d 168, 180; Prob. Code, § 17005, subd. (a)(2).)
We construe Susan’s petition challenging the dispository provisions of the Jane Alter Living Trust as a proceeding to determine the validity of a trust provision that came within the category of proceedings concerning the internal affairs of a trust under Probate Code section 17200, subdivision (b)(3). (Saks v. Damon Raike & Co. (1992) 7 Cal.App.4th 419, 429.) Under Probate Code section 17000, “the superior court having jurisdiction over the trust” had exclusive jurisdiction over the proceedings. The Marin County Superior Court possessed such jurisdiction because the trustee resided in that county.
B. Res Judicata
Wendy next maintains that the trial court was barred by the principle of collateral estoppel from finding that “the charges against Susan in the April 1991 petition were . . . unfortunate and irresponsible allegations of wrongdoing that never occurred.” The defense of res judicata, however, was not pleaded or otherwise raised in the trial court. “Res judicata is not a jurisdictional defense, and may be waived by failure to raise it in the trial court.” (7 Witkin, Cal. Procedure (4th ed. 1997) Judgment § 281, p. 821.) Moreover, the allegations in the April 1991 petition were never adjudicated in the San Francisco Probate Court. Instead, the proceeding was terminated by a stipulated order appointing a successor trustee. While a stipulated judgment may have collateral estoppel effect in California (California State Auto. Assn. Inter-Ins. Bureau v. Superior Court (1990) 50 Cal.3d 658, 665), probate orders are conclusive only as to matters “actually passed upon by the probate court.” (Estate of de Laveaga (1958) 50 Cal.2d 480, 487; Lazzarone v. Bank of America (1986) 181 Cal.App.3d 581, 591.)
C. Substantial Evidence
Contending that the court “misapplied the applicable legal standards to invalidate a testamentary document based on undue influence or fraud,” Wendy advances two arguments involving issues of law and substantial evidence. With respect to the court’s finding of undue influence, she argues that the invalidation of a testamentary document on this ground requires evidence of procurement, which is lacking in the present record. In the case of fraud, she argues that a finding of fraud requires evidence of intent to deceive, which cannot be found in the present record.
1. Undue influence
California courts have long held that a testamentary document may be set aside if procured by undue influence. (Estate of Ricks (1911) 160 Cal. 467, 480; Prob. Code, § 6104.) As authoritatively defined in Rice v. Clark (2002) 28 Cal.4th 89, 96 “[u]ndue influence is pressure brought to bear directly on the testamentary act, sufficient to overcome the testator’s free will, amounting in effect to coercion destroying the testator’s free agency.” (See also Estate of Shay (1925) 196 Cal. 355, 363; Hagen v. Hickenbottom (1995) 41 Cal.App.4th 168, 182; Estate of Sarabia (1990) 221 Cal.App.3d 599, 604; Estate of Truckenmiller (1979) 97 Cal.App.3d 326, 334; Civ. Code, § 1575.)
“The proof of undue influence by circumstantial evidence usually requires a showing of a number of factors which, in combination, justify the inference, but which taken individually and alone are not sufficient.” (12 Witkin, Summary of Cal. Law (9th ed. 1990) Wills and Probate, § 189, p. 218.) Among the indicia of undue influence is evidence that “the chief beneficiaries under the will were active in procuring the instrument to be executed.” (Estate of Lingenfelter (1952) 38 Cal.2d 571, 585; Estate of Franco (1975) 50 Cal.App.3d 374, 382-383.) While the person challenging the testamentary instrument ordinarily has the burden of proving undue influence, “under certain narrow circumstances, a presumption of undue influence may arise, shifting to the proponent of the disposition the burden of proving by a preponderance of the evidence that the donative instrument was not procured by undue influence.” (Conservatorship of Davidson (2003) 113 Cal.App.4th 1035, 1059.) Evidence that the beneficiary procured the testamentary instrument is one of three circumstances required to create this presumption. A presumption of undue influence “arises upon the challenger’s showing that (1) the person alleged to have exerted undue influence had a confidential relationship with the testator; (2) the person actively participated in procuring the instrument’s preparation or execution; and (3) the person would benefit unduly by the testamentary instrument.” (Rice v. Clark, supra, 28 Cal.4th 89, 97; Estate of Fritschi (1963) 60 Cal.2d 367, 376.)
Thus, while evidence of procurement is highly probative of undue influence and figures repeatedly in judicial discussions of the principle, it is essential to proof of undue influence only if the court relies on the presumption of undue influence to shift the burden of proof to the proponent of the testamentary instruction. In the case at bar, the court did not rely on the presumption, but rather applied the general principle of undue influence to a review of all the evidence. Appellant cannot challenge the court’s finding of undue influence by showing only the weakness or absence of evidence of procurement; other factors in combination can also support this finding. To challenge the finding, she must show that the evidence as a whole does not satisfy the general standard for proof of undue influence. We consider that, as a matter of law, her arguments relying exclusively on the one factor of procurement necessarily fail to show a lack of substantial evidence supporting the finding of undue influence.
Our conclusion requires affirmance of the judgment invalidating the dispository provisions of the Jane Alter Living Trust and the Second Amendment to the Trust. It is immaterial whether or not the trial court erred in applying the alternative principles of fraud. “If the decision of a lower court is correct on any theory of law applicable to the case, the judgment or order will be affirmed regardless of the correctness of the grounds upon which the lower court reached its conclusion.” (Estate of Beard (1999) 71 Cal.App.4th 753, 776.) “No rule of decision is better or more firmly established by authority, nor one resting upon a sounder basis of reason and propriety, than that a ruling or decision, itself correct in law, will not be disturbed on appeal merely because given for a wrong reason. If right upon any theory of the law applicable to the case, it must be sustained regardless of the considerations which may have moved the trial court to its conclusion.” (Davey v. Southern Pacific Co. (1897) 116 Cal. 325, 329.) Nevertheless, we will examine briefly the finding of fraud.
2. Fraud
The theories of undue influence and fraud commonly rest on a similar factual basis since contestants relying on a theory of undue influence may claim that the beneficiary employed misrepresentations to pressure the testator. They are, however, distinct grounds for contest. In Estate of Newhall (1923) 190 Cal. 709, the court held that the issue of fraud should have been submitted to the jury even though the evidence was insufficient to support a finding of undue influence. The court explained, “In cases where fraud alone is relied upon as a ground of contest it is the theory of the law that the testator, even though acting, in a manner of speaking, of his own free will, was, nevertheless, deceived by false data into doing that which he would not have done had he not been fraudulently imposed upon. . . . [¶] [F]alse representations . . . have been held to constitute fraud if it can be shown that they were designed to and did deceive the testator into making a will different in its terms from that which he would have made had he not been misled.” (Id. at p. 718.)
The elements of fraud in the procurement of a testamentary instrument are the same as those required to vitiate a contract. “One of the necessary elements is an intent to deceive the decedent or an intent to induce decedent to execute his will.” (Estate of Newhall, supra, 190 Cal. 709, 719; Civ. Code, § 1572.) Reversing a judgment of fraud, the court in Estate of Benton (1901) 131 Cal. 472, 478, found that “the all-important element is lacking, to wit: That Herbert A. Benton made these representations with intent to deceive the decedent, or with intent to induce decedent to execute his will. An intent to do one of these things is always an element and a necessary element in any given state of facts, in order that those facts may constitute actual fraud.”
The proof of intent to deceive, “[f]rom the very nature of the inquiry . . . must necessarily be largely or wholly circumstantial. . . . The contestant is not confined to the bare facts but is entitled to the benefit of all inferences which may legitimately be drawn from the facts established.” (Estate of Newhall, supra, 190 Cal. 709, 721.)
In the case at bar, the court found: “There is no rational explanation for this sudden shift in attitude by Jane toward and break with Susan in September 1990 other than Wendy’s falsely poisoning Jane’s mind against Susan because of her (Wendy’s) anger over the perceived slight in the August 1990 gifts. In other words, there is compelling circumstantial evidence that Wendy made continuing misrepresentations about Susan to their mother for the purpose of alienating Susan from her mother and effecting Susan’s and her family’s disinheritance. Proof that a testator/settlor is induced by misrepresentations into making dispositions that would not have been made absent those misrepresentations constitutes fraud.”
The statement of decision provides a detailed narrative supporting these conclusions. The court traced the change in Jane’s attitude toward Susan to a period beginning in August 1990 and extending into the first months of 1991. It was during this critical period, the court found, that Wendy became enraged at Susan for the perceived slight in Zal’s gifts to her family and sought representation of legal counsel. When Susan returned from a trip to Europe, she was confronted with accusations of Wendy and Jane that were later reflected in the petition filed April 1991 to remove her as trustee. This period also marked the beginning of a close and dependent relationship between Jane, who had recently separated from Zal, and Wendy, who had moved from Fresno to Marin County.
The court found that none of the allegations in the April 1991 petition had any basis in fact but Jane’s alienation from Susan still hardened and intensified over time, displaying elements of the “siege mentality” described by Susan’s expert witness, psychologist Abraham Nievod. The court inferred that Wendy induced this alienation by the misrepresentations reflected in the petition: “there is no basis that the Court can find in the record for any of the claims that were made against Susan in the petition. . . . Absent an effort wrongfully to discredit Susan and turn her mother against her, there is no reasonable explanation as to how the situation could have progressed to the point it did, with Wendy and Jane treating Susan like something short of a criminal in spite of all the work she had done for the benefit of the family.”
Wendy points to a mass of evidence that might justify her distrust of Susan and argues that the court erred in finding that she intended to deceive Jane about Susan’s conduct. But “in examining the sufficiency of the evidence to support a questioned finding, an appellate court must accept as true all evidence tending to establish the correctness of the finding as made, taking into account, as well, all inferences which might reasonably have been thought by the trial court to lead to the same conclusion. Every substantial conflict in the testimony is, under the rule which has always prevailed in this court, to be resolved in favor of the finding.” (Bancroft-Whitney Co. v. McHugh (1913) 166 Cal. 140, 142.) For the purpose of this appeal it is relevant only that the trial court found Susan’s testimony to be most credible and drew reasonable inferences from the facts recounted in its statement of decision. The facts themselves find support in the record. We therefore are compelled to uphold the finding of fraud.
D. Attorney’s Fees
In its statement of decision, the trial court ruled that Susan could recover attorney fees on equitable principles or, alternatively as an element of damages under Prentice v. North Amer. Title Guar. Corp. (1963) 59 Cal.2d 618, 620. The judgment entered concurrently with the statement of decision ordered that Susan could recover “her reasonable attorney’s fees and costs of suit incurred” from “Wendy’s share of the estate of Jane Alter.” Susan subsequently moved for a “determination of attorneys fees in accordance with judgment.” In an order filed May 12, 2003, the court set the judgment for attorney fees at $180,187.50, and filed an amended judgment ordering Wendy to pay Susan attorney fees in this amount.
In this appeal, Wendy attacks the judgment for attorney fees both on procedural and substantive grounds. Since we agree that Susan was not entitled to the judgment under substantive law, we do not reach her procedural objections. We turn first to the justification for awarding attorney fees as damages under Prentice and its progeny.
In Prentice, an escrow holder was negligent in closing the sale of property. As a consequence, the sellers were forced to bring a quiet title action against the purchaser and the holder of a first deed of trust. The sellers secured a judgment of damages against the escrow holder, which included the cost of the quiet title action. Affirming the judgment, the court held: “A person who through the tort of another has been required to act in the protection of his interests by bringing or defending an action against a third person is entitled to recover compensation for the reasonably necessary loss of time, attorney’s fees, and other expenditures thereby suffered or incurred.” (Prentice v. North Amer. Title Guar. Corp., supra, 59 Cal.2d 618, 620.)
The court explained that the judgment was not concerned “ ‘with the measure and mode of compensation of attorneys’ but with damages wrongfully caused by defendant’s improper actions. [¶] When a paid escrow holder has, as in this case, negligently made it necessary for the vendor of land to file a quiet title action against a third person, attorney’s fees incurred by the vendor in prosecuting such action are recoverable as an item of the vendor’s damages in an action against the escrow holder. [¶] Here the natural and proximate consequence of defendant’s negligence was to require plaintiffs to file an action seeking to quiet their title against claims by either the [purchaser] or [lender].” (Prentice v. North Amer. Title Guar. Corp., supra, 59 Cal.2d 618, 621.)
Decisions applying Prentice recognize that it represents an application of the usual measure of tort damages in circumstances where the defendant’s tortious conduct has made it necessary for a plaintiff to incur legal expenses to protect his interests. The court in Heckert v. MacDonald (1989) 208 Cal.App.3d 832, 838, observed, “ ‘In such cases there is no recovery of attorney fees qua attorney fees.’ ” Upholding a judgment for damages against an insurance broker, the court in Saunders v. Cariss (1990) 224 Cal.App.3d 905, 910, held that the damages properly included the cost of suit against the insurer. “[Plaintiff] is not seeking the fees paid to his attorney for prosecuting this action against [the insurance broker]. Rather he is claiming as damages those attorneys fees he incurred in attempting to mitigate the damages caused by [the broker’s] alleged malpractice.”
As noted in Sooy v. Peter (1990) 220 Cal.App.3d 1305, 1310, “nearly all of the cases which have applied the [Prentice] doctrine involve a clear violation of a traditional tort duty between the tortfeasor who is required to pay the attorney fees and the person seeking compensation for those fees.” Thus, the rule has been applied to cases involving breach of an escrow holder’s duty of due care to the seller (Bruckman v. Parliament Escrow Corp. (1987) 190 Cal.App.3d 1051, 1060; Ruth v. Lytton Sav. & Loan Assn. (1968) 266 Cal.App.2d 831, 844-845), the breach of a real estate broker’s fiduciary duty to his client (Gray v. Don Miller & Associates, Inc. (1984) 35 Cal.3d 498, 507-508; Heckert v. MacDonald, supra, 208 Cal.App.3d 832, 836-838), the fraudulent misrepresentation of a process server (Slaughter v. Legal Process & Courier Service (1984) 162 Cal.App.3d 1236, 1251-1252), and intentional interference with use of an easement (Manning v. Sifford (1980) 111 Cal.App.3d 7, 11) and with an exclusive recording contract. (Vanguard Recording Society, Inc. v. Fantasy Records, Inc. (1972) 24 Cal.App.3d 410, 413-414.)
Prentice made clear that Code of Civil Procedure section 1021 “prohibits the allowance of attorney fees against a defendant in an ordinary two-party lawsuit.” (Prentice v. North Amer. Title Guar. Corp., supra, 59 Cal.2d 618, 620-621.) The courts have refrained from expanding the rule in a way that would undermine the general rule that a party bears his own attorney fees. (Pederson v. Kennedy (1982) 128 Cal.App.3d 976, 980.) Reversing a judgment for attorney fees against one of three joint tortfeasors in Vacco Industries, Inc. v. Van Den Berg (1992) 5 Cal.App.4th 34, 57, the court stated, “There is nothing about their relationship or their conduct that justifies singling out Van Den Berg as the one whose conduct caused Vacco to have to prosecute a legal action against the other two. . . . The rule of Prentice was not intended to apply to one of several joint tortfeasors in order to justify additional attorney fee damages. If that were the rule there is no reason why it could not be applied in every multiple tortfeasor case with the plaintiff simply choosing the one with the deepest pocket as the ‘Prentice target.’ Such a result would be a total emasculation of Code of Civil Procedure section 1021 in tort cases.”
It is clear that Prentice has no application to the present case. Susan did not bring an action against Wendy for damages on a tort theory of liability but rather petitioned the court for an order declaring the testamentary documents invalid. Moreover, the petition was essentially a two-party lawsuit, though Wendy was sued both individually and as trustee. Unlike Prentice, the judgment for attorney fees did not represent “an application of the usual measure of tort damages” (Sooy v. Peter, supra, 220 Cal.App.3d 1305, 1310), but rather was a device to award attorney fees in probate proceedings. To this extent, it served to supplant Code of Civil Procedure section 1021 and the ordinary rules and practices of probate court regarding the award of attorney fees. If Prentice authorized the court to award attorney fees in this case, it would allow the recovery of attorney fees in all proceedings before the probate court to invalidate a testamentary document based on some alleged tortious conduct.
3. Equitable Award of Attorney Fees
In her briefs, Susan does not argue that the judgment for attorney fees can be justified by the equitable powers of the probate court, as suggested in the statement of decision. Indeed, we are unable to formulate any rationale to uphold the judgment for attorney fees on this ground. The probate court, it is true, possesses the power to order an allowance out of a trust estate as reimbursement for expenses, including attorney fees. (7 Witkin, Cal. Procedure (4th ed. 1997) Judgment, § 151, pp. 670-671, (2005 supp.) Judgment, § 151, p. 156.) But it cannot be argued that Susan rendered such a service to the trust. The effect of her petition was to secure a decree adjudicating the trust to be “invalid and void.” For her part, Wendy held the assets of the trust as “constructive trustee for the benefit of [all] persons entitled to distribution [thereof].” As constructive trustee, her sole duties were to account for her administration of the trust and to transfer the assets to the proper parties. We see no basis for implying a further duty to reimburse Susan for bringing a petition to invalidate the former trust. In any event, the amended judgment did not relate in any manner to trust administration under the supervision of the probate court but rather ordered that Susan recover attorney fees directly from Wendy. The judgment, in short, imposed a personal judgment in favor of Susan and against Wendy.
We see no relevance to the cases cited by the trial court. Estate of Whitney (1932) 124 Cal.App. 109, 121, concerned an allowance from a trust estate to pay for an internal audit. Wells Fargo Bank v. Marshall (1993) 20 Cal.App.4th 447, 458, which concerned a proceeding to construe the dispository provisions of a trust, awarded attorney fees to a successful contestant on the ground that it was consistent with “the evident intent of the trustor” as expressed in the trust instrument.
Since we find no basis in substantive law for the award of attorney fees to Susan, we do not reach the procedural objections that Wendy raises to the recovery of attorney fees. Our conclusion necessarily calls for reversal of the post-judgment order filed November 14, 2003, relating to enforcement of the judgment for attorney fees.
We reverse the portion of the amended judgment filed July 30, 2003, awarding $180,187.50 in attorney fees to the petitioner Susan David, as well as the portion of the judgment entered December 10, 2002, awarding attorney fees, and the order filed May 12, 2003, and the order filed November 14, 2003, denying inter alia Wendy’s motion for a protective order. In all other respects, the judgment is affirmed.
Each party shall bear her own costs on appeal.
__________________________________ Swager, J. | |
We concur: __________________________________ Marchiano, P. J. __________________________________ Stein, J. |
Trial Court: | Marin County Superior Court |
Trial Judge: | Hon. John A. Sutro, Jr. |
Attorney for Defendant and Appellant: | John A. Hartog, Inc. John A. Hartog Four Orinda Way, Suite 200-D Orinda, CA 94563 McInerney & Dillon, P.C. Jewell J. Hargleroad One Kaiser Plaza, Suite 1850 Oakland, CA 94612-3610 |
Attorneys for Plaintiff and Respondent: | Law Offices of Catherine Duggan Catherine Duggan One Kaiser Plaza, Suite 480 Oakland, CA 94612 Law Offices of Robert E. White Robert E. White Susan C. Rushakoff 177 Post Street, Suite 890 San Francisco, CA 94108 |
David v. Hermann, A101681, A104110, A104111, and A104693
Texas Estate Case - Diamond v Diamond
DONALD M. DIAMOND AND ROGER A. DIAMOND, Appellants v. MAX M.
DIAMOND, Appellee
No. 01-89-00980-CV
COURT OF APPEALS OF TEXAS, First District, Houston
1991 Tex. App. LEXIS 151
January 17, 1991, Delivered
January 17, 1991, Filed
NOTICE: [*1] PURSUANT TO RULE 90 (i) OF THE TEXAS RULES OF APPELLATE PROCEDURE,
UNPUBLISHED OPINIONS SHALL NOT BE CITED AS AUTHORITY BY COUNSEL OR BY A
COURT.
PRIOR HISTORY: On Appeal from the Probate Court No. 1; Harris County, Texas; Trial Court Cause No.
199,489.
DISPOSITION: Judgment affirmed as reformed
CASE SUMMARY:
PROCEDURAL POSTURE: Appellant sons challenged the judgment of the Probate Court No. 1 of Harris
County (Texas), which was rendered judgment in favor of appellee father in appellee's suit alleging fraud,
breach of fiduciary duty, and breach of the terms of trust, arising out of appellants' administration of a trust.
OVERVIEW: Appellant sons procured from their appellee father an irrevocable transfer of assets, and his
resignation as executor and trustee of the decedents estate. Thereafter, appellee filed an action against appellants
for wrongdoing arising from appellants' administration of the estate and appellee's personal assets. The trial
court granted appellee judgment based upon fraud, breach of fiduciary duty, and breach of the terms of trust.
Appellants challenged the trial court's judgment. On appeal, the court reformed the judgment to reflect a change
in the date from which prejudgment interest ran on the mental anguish award, and then affirmed the judgment
as reformed. The court found that prejudgment interest accrued beginning six months after the date the cause of
action accrued. The court found that there was evidence sufficient to support the jury's findings on all other
issues. Appellants' claim that the trial court erred in failing to award attorney's fees was waived because they
failed to request the trial court to make a finding on the bad faith issue of the Deceptive Trade Practices Act,
Tex. Bus. & Com. Code Ann. § 17.50(c) (1987).
OUTCOME: The court reformed the judgment to reflect a change in the date from which prejudgment interest
ran on the mental anguish award and affirmed the judgment as reformed because there was sufficient evidence to
support the jury's findings.
LexisNexis(R) Headnotes
Civil Procedure > Appeals > Standards of Review > Substantial Evidence > General Overview
[HN1] In reviewing legal insufficiency or "no evidence" points, the reviewing court considers only the evidence
and inferences, when viewed in their most favorable light, that tend to support the finding, and disregards all
evidence and inferences to the contrary. An appellate court is limited to reviewing only the evidence tending to
support the jury findings in a "no evidence" point of error. If there is any evidence of probative force to support
the finding, the point must be overruled and the finding upheld.
Civil Procedure > Appeals > Standards of Review > Substantial Evidence > General Overview
[HN2] "No evidence" points of error must be sustained when the record discloses one of the following: (1) a
complete absence of evidence of a vital fact; (2) the court is barred by rules of law or evidence from giving
weight to the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more
than a mere scintilla of evidence; or (4) the evidence establishes conclusively the opposite of a vital fact.
Civil Procedure > Appeals > Standards of Review > Substantial Evidence > General Overview
[HN3] If there is more than a scintilla of evidence to support the jury finding, the no evidence challenge fails. A
"scintilla" of evidence is when the evidence offered to prove a vital fact is so weak that it does no more than
create a mere surmise or suspicion of its existence.
Civil Procedure > Appeals > Standards of Review > Substantial Evidence > General Overview
[HN4] If reasonable minds cannot differ from the conclusion that the evidence offered to support the existence
of a vital fact lacks probative force, it is the legal equivalent of no evidence. If the evidence furnishes some
reasonable basis for differing conclusions by reasonable minds about the existence of the vital fact, it amounts
to more than a scintilla of evidence.
Civil Procedure > Appeals > Standards of Review > Clearly Erroneous Review
[HN5] In reviewing a factual insufficiency of the evidence point of error, the appellate court must first examine
all of the evidence, and, having considered and weighed all of the evidence, it should set aside the verdict only
if the evidence is so weak or the finding is so against the great weight and preponderance of the evidence that it
is clearly wrong and unjust.The reviewing court of appeals may not disregard a finding that has factual support
or make a contrary finding in entering judgment for one of the parties.
Civil Procedure > Appeals > Standards of Review > Clearly Erroneous Review
[HN6] Because the trier of fact is the sole judge of the credibility of the witnesses and the weight to be given
their testimony, the appellate court may not substitute its opinion for that of the trier of fact merely because it
might have reached a different fact conclusion.
Criminal Law & Procedure > Criminal Offenses > Inchoate Crimes > Conspiracy > Elements
Torts > Procedure > Multiple Defendants > Concerted Action > Civil Conspiracy > Elements
[HN7] The essential elements of a cause of action for civil conspiracy are: (1) two or more persons, (2) an object
to be accomplished, (3) a meeting of minds on the object or course of action, (4) one or more unlawful, overt
acts, and (5) damages as the proximate result. The agreement need not be formal; the understanding may be a
tacit one, and it is not essential that each conspirator have knowledge of the details of the conspiracy. Upon
entering a conspiracy, one becomes a party to all acts previously or subsequently done by any of the other
conspirators in pursuit of the conspiracy. Each conspirator is responsible for the acts done by coconspirators in
pursuit of the conspiracy during its existence.
Torts > Damages > Compensatory Damages > Pain & Suffering > Emotional & Mental Distress >
General Overview
[HN8] The rule in Texas is that damages are recoverable for mental suffering, even if unaccompanied by
physical suffering, when the wrong complained of is a willful one, intended by the wrongdoer to produce
mental anguish or from which such result should be reasonably anticipated as a natural consequence.
Civil Procedure > Remedies > Damages > Punitive Damages
Torts > Damages > Punitive Damages > General Overview
[HN9] Exemplary damages must be reasonably proportioned to actual damages, and the determination of
exemplary damages depends upon the facts of each particular case, taking into consideration (1) the nature of the
wrong, the character of the conduct involved, the degree of the culpability of the wrongdoer, the situation and
sensibilities of the parties concerned, and the extent to which such conduct offends a public sense of propriety.
Civil Procedure > Trials > Jury Trials > Actions in Equity
Civil Procedure > Remedies > Damages > Punitive Damages
Torts > Damages > Punitive Damages > General Overview
[HN10] The amount of punitive damages to be awarded depends on the facts of the case and rests largely within
the discretion of the jury. In addition to items of actual damages, the court may take into account equitable
relief granted to the plaintiff.
Civil Procedure > Appeals > Standards of Review > Clearly Erroneous Review
Civil Procedure > Appeals > Standards of Review > Substantial Evidence > Sufficiency of Evidence
[HN11] An appellate court is not permitted to disregard the jury's answers to the issues merely because the
jury's reasoning in arriving at its figure may be unclear to it.
Civil Procedure > Appeals > Reviewability > Preservation for Review
[HN12] Where there is no argument or cited authority in support of a point of error, the point of error is
waived.
Estate, Gift & Trust Law > Trusts > Trustees > Duties & Powers > General Overview
Governments > Fiduciary Responsibilities
[HN13] In a fiduciary relationship, a party owes the principal the duties of good faith and candor, which
includes the general duty of full disclosure respecting matters affecting the principal's interests and a general
prohibition against the fiduciary's use of the relationship to benefit his personal interest, except with the full
knowledge and consent of the principal.
Contracts Law > Contract Conditions & Provisions > Exculpatory Clauses
Estate, Gift & Trust Law > Trusts > Beneficiaries > General Overview
Estate, Gift & Trust Law > Trusts > Trustees > Duties & Powers > General Overview
[HN14] The fundamental duties of a trustee include the use of skill and prudence which an ordinary capable and
careful person will use in the conduct of his own affairs, and loyalty to the beneficiaries of the trust. Neither can
an exculpatory provision in the trust instrument be effective to relieve the trustee of liability for action taken in
bad faith or for acting intentionally adverse or with reckless indifference to the interests of the beneficiary.
Civil Procedure > Remedies > Judgment Interest > Prejudgment Interest
Torts > Damages > Interest > Prejudgment Interest
Torts > Procedure > Statutes of Limitations > General Overview
[HN15] Under the Cavnar rule, prejudgment interest accrues beginning six months after the date the cause of
action accrues. The Cavnar rule has been applied to intentional tort and fraud cases.
JUDGES: Frank C. Price, 1 Justice. Justice Bass and Justice Bill Stephens 2 also sitting.
1 The Honorable Frank C. Price, former justice, Court of Appeals, First District of Texas at Houston,
sitting by assignment.
2 The Honorable Bill Stephens, retired justice, Court of Appeals, Fifth District of Texas at Dallas,
sitting by assignment.
OPINION BY: PRICE
OPINION
OPINION
This appeal arises from a suit by appellee, Max M. Diamond, against his two sons, appellants, Donald M.
Diamond ("Donald") and Roger A. Diamond ("Roger"), for wrongdoing related to the administration of his
deceased wife's estate, two trusts established under her will, and his own personal assets. Appellee recovered
against Donald on theories of fraud, undue influence, breach of fiduciary duty, and invasion of privacy; and
against Roger on conspiracy to self-deal and breach of the terms of trust.
Appellee recovered [*2] actual damages, exemplary damages, and attorneys fees. Appellee also recovered
declaratory relief setting aside certain instruments and transfer documents, ordering distributions from the trust
funds, reimbursements to trust funds, and an accounting. More specifically, appellee received a joint and several
judgment against appellants in the sum of $ 250,000 for past mental anguish, with punitive damages against
Donald and Roger in the amount of $ 125,000 each. A remittitur reduced the punitive damages assessed against
Roger to $ 50,000. Prejudgment interest was awarded on the damages for mental anguish. Appellants were
ordered to reimburse the marital deduction trust $ 64,000 by Don and $ 45,325 by Roger. They were ordered to
reimburse the family trust $ 12,065 each.
Appellants do not contest the setting aside of the documents.
During 45 years of marriage, appellee and his first wife, Millie, had two sons, Roger and Donald, and
accumulated assets totaling approximately $ 6,000,000. In 1974, appellee suffered a heart attack. During the
recovery period, Donald helped his parents with their business and personal affairs and continued to so assist
his father after his mother died. In [*3] 1986, appellee executed a general power of attorney, appointing Donald
his attorney-in-fact.
On April 4, 1985, Millie died leaving a will. Appellee was appointed independent executor of Millie's
estate and trustee of two trusts, the marital deduction trust and the family trust. Millie's one-half of the estate,
approximately $ 3,000,000, went into the trusts (approximately $ 400,000 into the family trust and $
2,600,000 into the marital deduction trust). Appellee was the primary beneficiary of these trusts, and appellants
were the secondary beneficiaries.
The will provided that, under the marital deduction trust, the trustee was to make quarterly distributions to
the appellee out of the income from the trust assets and, such amounts of principal, as necessary, to provide for
appellee's health, support, and maintenance. It also provided that no income or principal of the marital
deduction trust should be distributed to any person other than appellee during his lifetime. Distributions from
the income and principal of the family trust were to be made to appellee and Millie's descendants for their
health, support, maintenance, and education, at the discretion of the trustee.
On May [*4] 17, 1987, appellee suffered a stroke in Galveston while at the beach with Allison Green, in
whom appellee was romantically interested. He was taken to an emergency room in Galveston and later
transported to Pasadena Bayshore Hospital. Donald asked appellee's doctor to have all but family excluded from
visiting appellee. On May 27, 1987, appellee was taken to Plaza del Oro hospital in Houston for further
recovery and rehabilitation.
Appellee testified that on or about June 9, 1987, he contacted attorney Jack Eckels about preparing a
prenuptial contract. On June 9, 1987, in appellee's hospital room, with Donald present, Eckels presented
appellee with three documents: (1) an irrevocable transfer of appellee's $ 3,000,000 of assets into the marital
deduction trust, (2) an application to resign as independent executor of Millie's estate, and (3) a resignation as
trustee from the two trusts and an acceptance of Donald as successor trustee of the two trusts. The transfer
document had not been discussed with appellee before June 9, 1987. It contained a provision eliminating
appellee's right to remove the new trustee. Appellee testified he thought he was signing the prenuptial
agreement.
[*5] Following the execution of the transfer document, appellee's name was removed from an account
containing estate assets, and Donald and Roger's names were added. Beginning January 26, 1988, Donald gave
Roger and his family $ 31,825 from the marital deduction trust and $ 50,000 to himself and his family.
Donald paid investigator and attorney fees arising from this litigation out of the marital deduction trust.
Appellee hired an attorney to assist him in eliminating what he perceived to be Donald's interference in his
personal life. He sought the return from Donald of some of his credit cards, an accounting of the assets and
transactions regarding the marital deduction trust, and to compel Donald to distribute to appellee the amounts
from the trust specified in the will.
Appellants' first point of error maintains the trial court erred in rendering judgment against Roger because
there is no evidence, and, alternatively, insufficient evidence to support the jury finding of civil conspiracy.
[HN1] In reviewing legal insufficiency or "no evidence" points, the reviewing court considers only the
evidence and inferences, when viewed in their most favorable light, that tend to support the finding, [*6] and
disregards all evidence and inferences to the contrary. Davis v. City of San Antonio, 752 S.W.2d 518, 522
(Tex. 1988); Stafford v. Stafford, 726 S.W.2d 14, 16 (Tex. 1987); Alm v. Aluminum Co. of America, 717 S.W.
2d 588, 593 (Tex. 1986); King v. Bauer, 688 S.W.2d 845, 846 (Tex. 1985). An appellate court is limited to
reviewing only the evidence tending to support the jury findings in a "no evidence" point of error. Sherman v.
First Nat'l Bank, 760 S.W.2d 240, 242 (Tex. 1988). If there is any evidence of probative force to support the
finding, the point must be overruled and the finding upheld. Id.; In re King's Estate, 150 Tex. 662, 664, 244
S.W.2d 660, 661 (1951).
[HN2] "No evidence" points of error must be sustained when the record discloses one of the following:
a. a complete absence of evidence of a vital fact;
b. the court is barred by rules of law or evidence from giving weight to the only evidence offered to prove a
vital fact;
c. the evidence offered to prove a vital fact is no more than a mere scintilla of evidence; or
d. the evidence establishes conclusively the opposite of a vital fact.
Otis Elevator Co. v. Joseph, 749 S.W.2d 920, 923 (Tex. [*7] App. -- Houston [1st Dist.] 1988, no writ).
[HN3] If there is more than a scintilla of evidence to support the finding, the no evidence challenge fails.
Stafford, 726 S.W.2d at 16. A "scintilla" of evidence is when the evidence offered to prove a vital fact is so
weak that it does no more than create a mere surmise or suspicion of its existence. Kindred v. Con/Chem, Inc.,
650 S.W.2d 61, 63 (Tex. 1983).
[HN4] If reasonable minds cannot differ from the conclusion that the evidence offered to support the
existence of a vital fact lacks probative force, it is the legal equivalent of no evidence. If the evidence furnishes
some reasonable basis for differing conclusions by reasonable minds about the existence of the vital fact, it
amounts to more than a scintilla of evidence. Kindred, 650 S.W.2d at 63.
[HN5] In reviewing a factual insufficiency of the evidence point of error, the court of appeals must first
examine all of the evidence, Lofton v. Texas Brine Corp., 720 S.W.2d 804, 805 (Tex. 1986); and, having
considered and weighed all of the evidence, it should set aside the verdict only if the evidence is so weak or the
finding is so against the great weight and preponderance of the evidence that [*8] it is clearly wrong and
unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986); Garza v. Alviar, 395 S.W.2d 821, 823 (Tex. 1965);
Otis Elevator Co., 749 S.W.2d at 923. The reviewing court of appeals may not disregard a finding that has
factual support or make a contrary finding in entering judgment for one of the parties. Garza, 395 S.W.2d at
823.
[HN6] Because the trier of fact is the sole judge of the credibility of the witnesses and the weight to be
given their testimony, Rego Co. v. Brannon, 682 S.W.2d 677, 680 (Tex. App. -- Houston [1st Dist.] 1984,
writ ref'd n.r.e.), the court of appeals may not substitute its opinion for that of the trier of fact merely because it
might have reached a different fact conclusion. Herbert v. Herbert, 754 S.W.2d 141, 144 (Tex. 1988); Benoit v.
Wilson, 150 Tex. 273, 281, 239 S.W.2d 792, 797 (1951).
[HN7] The essential elements of a cause of action for civil conspiracy are: (1) two or more persons, (2) an
object to be accomplished, (3) a meeting of minds on the object or course of action, (4) one or more unlawful,
overt acts, and (5) damages as the proximate result. Massey v. Armco Steel Co., 652 S.W.2d 932, 934 (Tex.
1983). The agreement need not [*9] be formal; the understanding may be a tacit one, and it is not essential that
each conspirator have knowledge of the details of the conspiracy. Bourland v. State, 528 S.W.2d 350, 354 (Tex.
Civ. App. -- Austin 1975, writ ref'd n.r.e.). Upon entering a conspiracy, one becomes a party to all acts
previously or subsequently done by any of the other conspirators in pursuit of the conspiracy. Id. Each
conspirator is responsible for the acts done by coconspirators in pursuit of the conspiracy during its existence.
Harang v. Aetna Life Ins. Co., 400 S.W.2d 810, 818 (Tex. Civ. App. -- Houston 1966, writ ref'd n.r.e.).
In applying the Massey elements of conspiracy to the facts of this case, we find there were two persons,
Roger and Donald. There was evidence which showed the objects to be accomplished: (1) the distribution of
cash out of the marital deduction trust to themselves and their families, (2) the minimization of distributions
out of the trust funds to appellee that would have the effect of maximizing the amount of trust funds that would
pass to themselves upon appellee's death, and (3) the payment for the legal expenses of the defense of their
actions out of the marital deduction [*10] trust funds. There was evidence of a meeting of the minds on these
objectives between Roger and Donald when Roger testified he agreed with everything Donald did as trustee in
the case. Roger selected the attorneys to defend himself and Donald against appellee's lawsuit, further
evidencing his agreement with Donald on the objectives to be accomplished. Roger met the requirement of one
or more overt unlawful acts by receiving the cash gifts and financing his legal defense from the marital
deduction trust fund when the terms of the trust specified that no person other than appellee was to receive
payments out of those funds during appellee's lifetime. The element of damages is met by the jury's finding,
which appellants do not dispute, of $ 225,139 in distributions that Donald should have made to appellee.
Thus, we find there was more than a scintilla of evidence to support the jury's finding of conspiracy on
Roger's part. Concerning appellants' factual insufficiency of the evidence challenge, we have examined all the
evidence, including that favorable to appellants, weighed it, and do not find the evidence supporting the jury's
finding of conspiracy so against the great weight and preponderance [*11] of the evidence that it is clearly
wrong and unjust.
We overrule appellants' first point of error.
In their second point of error, appellants contend the trial court erred in awarding appellee damages for
mental anguish, claiming there was no or insufficient evidence to support the jury finding of damages for past
mental anguish because it was not consistent with other jury findings, or, alternatively, it was excessive, and
the Court should suggest a remittitur.
[HN8] The rule in Texas is that damages are recoverable for mental suffering (even if unaccompanied by
physical suffering) when the wrong complained of is a willful one, intended by the wrongdoer to produce
mental anguish or from which such result should be reasonably anticipated as a natural consequence. Kramer v.
Downey, 680 S.W.2d 524, 525 (Tex. App. -- Dallas 1984, writ ref'd n.r.e.). Quoting from Trevino v.
Southwestern Bell Tel. Co., 582 S.W.2d 582, 584 (Tex. Civ. App. -- Corpus Christi, 1979, no writ) the court,
in Teledyne Exploration Co. v. Klotz, 694 S.W.2d 109, 112 (Tex. App. -- Corpus Christi 1983, writ ref'd
n.r.e.), described mental anguish as:
'Implying a relatively high degree of mental pain and distress. [*12] It is more than mere disappointment,
anger, resentment or embarrassment, although it may include all of these. It includes a mental sensation of
pain resulting from such painful emotions as grief, severe disappointment, indignation, wounded pride, shame,
despair and/or public humiliation.'
Tim Blacklock, a medical attendant who cared for appellee after appellee left the hospital to recuperate at
home, testified that, upon being hired, Donald told him that Allison Green was not to contact appellee. Later,
Donald asked Tim how appellee was doing with his exercising and therapy. Tim told Donald, when appellee
was denied the opportunity to see Green, he was depressed and did not have the initiative to go on, but when
he saw her it made him strive to get better. Tim testified, at this time, Donald was considering letting appellee
see Green again. Tim also testified that the arguments appellee had with his son and his concern over his
finances kept appellee depressed.
Olga Villareal, another of appellee's nursing aides, during his recuperation at home, testified that in a
telephone conversation with Donald, appellee got upset about Donald having appellee's credit cards. She heard
appellee [*13] tell Donald that he wanted him to stop interfering with his affairs. Villareal also testified
appellee "really got upset" about a mink coat that he had bought for Green, which she had returned. Appellee
wanted to give it back to Green, but said Donald lied to him saying he had disposed of it.
Appellee's doctors told his family it was important to his treatment to remember appellee was an adult and
needed the opportunity to control his own life. Appellee was concerned over Donald's control of his life and
Donald's restrictions of his movements that prevented him from leaving his house. Appellee testified that
Donald told him he had full control of him. Appellee's attorney testified appellee told him Donald claimed that
he was appellee's guardian. One witness, who talked to appellee in the late fall of 1987, said appellee was sad
and said "I don't have control. Donny has power of attorney." Appellee wrote Donald to describe his negative
feelings toward him and to tell him if he came around appellee's house anymore or opened his mail anymore he
would report him to the authorities.
On taking the witness stand, appellee testified he was upset. He testified Donald's freezing of his assets
[*14] had humiliated him. Appellee stated he had not seen his grandchildren lately because "there's such hatred
in my heart for these boys that I can't go there and try to converse decently with them."
As in the Teledyne case, where the plaintiff said he felt "violated" when his land was bulldozed without his
consent, we feel the evidence of appellee's feelings of loss of control of his life, as well as the other evidence
discussed above, reflect that degree of mental pain, severe disappointment, and indignation sufficient to support
the jury's verdict. See Teledyne, 694 S.W.2d at 112.
The fact that the jury found past mental anguish but not future mental anguish is not a conflict in the jury's
verdict. The jury evidently concluded there was sufficient evidence of past mental anguish, but were not
convinced appellee would suffer future mental anguish from Donald's and Roger's actions.
Concerning appellants' request for a remittitur, we have reviewed all of the evidence and cannot say that the
award is so excessive as to shock the conscience of this Court. Dover Corp. v. Perez, 587 S.W.2d 761, 768
(Tex. Civ. App. -- Corpus Christi 1979, writ ref'd n.r.e.). See also Mahan Volkswagen, [*15] Inc. v. Hall,
648 S.W.2d 324, 334 (Tex. App. -- Houston [1st Dist.] 1982, writ ref'd n.r.e.).
We overrule appellants' second point of error.
Appellants contend in their third point of error that the trial court erred in awarding appellee punitive
damages against appellants.
[HN9] It has been held exemplary damages must be reasonably proportioned to actual damages, and the
determination of exemplary damages depends upon the facts of each particular case, taking into consideration
(1) the nature of the wrong, the character of the conduct involved, the degree of the culpability of the
wrongdoer, the situation and sensibilities of the parties concerned, and the extent to which such conduct offends
a public sense of propriety. Wright v. Gifford-Hill & Co., Inc., 725 S.W.2d 712, 714 (Tex. 1987). [HN10] The
amount of punitive damages to be awarded depends on the facts of the case and rests largely within the
discretion of the jury. See Voskamp v. Arnoldy, 749 S.W.2d 113, 121 (Tex. App -- Houston [1st Dist.] 1987,
writ denied). In addition to items of actual damages, the court may take into account equitable relief granted to
the plaintiff. Fillion v. Troy, 656 S.W.2d 912, 915 (Tex. App. -- Houston [*16] [1st Dist.] 1983, writ ref'd
n.r.e.).
The jury found actual damages to appellee of $ 250,000 for mental anguish and that Roger and Donald
should reimburse the trusts in the amount of $ 133,455. Neither Roger nor Donald challenged the jury's
findings that they breached the terms of the marital deduction and family trusts. They do not contest the setting
aside of the three documents that allowed Donald to take control of $ 6,000,000. Considering the evidence that
within weeks of appellee having a serious stroke, and while he was still recuperating in the hospital, Donald
fraudulently obtained appellee's signature allowing the transfer of all asset documents and authorizing Donald's
and Roger's actions thereafter, in their giving and receiving large gifts from the trusts, their interference with
appellee's personal life, and the wrongful invasion of the trust for their own legal fees, we cannot say the
amount of punitive damages awarded by the jury was excessive.
We overrule appellants' third point of error.
In their fourth point of error, appellants contend the trial court erred in paragraph 10 and 11 of the
judgment in ordering appellants, Donald and Roger, to reimburse respectively [*17] $ 64,000 and $ 45,325 to
the marital deduction trust. Specifically, appellants argue that since the gifts to Donald's family out of the
marital deduction trust fund only amounted to $ 50,000 and the gifts to Roger's family only amounted to $
31,825, there is no evidence or insufficient evidence to support the jury's verdict and the judgment awarding the
higher amounts.
Appellee introduced into evidence a list of disbursements on the Merill Lynch account of the marital
deduction trust. It showed payments of $ 12,974.46 to Donald and his company, D&M Enterprises, from July
17, 1988, through January 28, 1989. The jury heard evidence that Donald was paying himself a fee for the years
1987, 1988, and 1989 for managing appellee's financial affairs. Based on the irrevocable transfer of all of
appellee's assets to Donald's control his failure to pay income from the trust to appellee until he hired an
attorney, the freezing of appellee's accounts, and other activities of Donald after June 9, 1987, the jury could
very well have concluded that Donald was no longer acting on behalf of appellee, but, instead, for himself, and
therefore, Donald should reimburse those fees to the marital deduction [*18] trust.
The jury also heard evidence that both Donald and Roger were paying their own attorney's fees out of the
marital deduction trust. The jury could have concluded that Donald and Roger should return that money to the
trust since the terms of the will relating to distributions from the marital deduction trust could be made only to
appellee during his lifetime. The amount of money taken out of the marital deduction trust fund by Donald and
Roger for payment of their own legal fees from June 14, 1988, to January 24, 1989, was $ 23,500, and there
was an additional $ 4,883.34 paid to investigators hired on their behalf to assist in the preparation of their
defense in this action.
[HN11] We are not permitted to disregard the jury's answers to the issues merely because the jury's
reasoning in arriving at its figure may be unclear to us. Adams v. Petrade Intern. Inc., 754 S.W.2d 696, 710
(Tex. App. -- Houston [1st Dist.] 1988, writ denied). We hold there was evidence sufficient to support the
jury's answers concerning the amount of money to be reimbursed to the marital deduction trust fund by Donald
and Roger. We overrule appellants' fourth point of error.
In the fifth point of error, Donald [*19] challenges the sufficiency of the evidence to support the jury's
affirmative answers to jury questions 2(a), that Donald unduly influenced appellee on June 9, 1987; to 2(b),
that Donald constructively defrauded appellee on June 9, 1987; to 2(d) that Donald breached his fiduciary duty;
and to 2(e) that Donald engaged in self-dealing. Donald and Roger both complain the trial court erred in
rendering judgment against them for punitive damages based on findings of malice.
Donald does not challenge the sufficiency of the evidence to support the jury's answers to questions 2(c),
that he committed common law fraud on June 9, 1987; 2(f), that he invaded appellee's privacy, or 2(g), that he
breached the terms of the trust. In the brief, Donald presents no argument, authorities, or references to the
statement of facts concerning the issues of undue influence or constructive fraud. [HN12] Where there is no
argument or cited authority in support of a point of error, the point of error is waived. See J. B. Custom Design
and Bldg. v. Clawson, 794 S.W.2d 38, 41 (Tex. App. -- Houston [1st Dist.] 1990, no writ). Thus, the portions
of Donald's fifth point of error related to these issues where there is [*20] no argument, no citation to
authority, nor citation to the record, are waived.
This leaves under the fifth point of error, the question of the sufficiency of the evidence to support the
jury's finding of Donald's breach of fiduciary duty, engagement in self-dealing, and the finding of malice by
Donald and Roger.
As trustee of the two trusts and executor of his mother's will, Donald was in a fiduciary relationship to
appellee. [HN13] In such a relationship, Donald owed appellee the duties of good faith and candor, which
includes the general duty of full disclosure respecting matters affecting the principal's interests and a general
prohibition against the fiduciary's use of the relationship to benefit his personal interest, except with the full
knowledge and consent of the principal. Chien v. Chen, 759 S.W.2d 484, 495 (Tex. App. -- Austin 1988, no
writ). As stated in Interfirst Bank Dallas, N.A. v. Risser, 739 S.W.2d 882, 888 (Tex. App. -- Texarkana 1987,
no writ):
[HN14] The fundamental duties of a trustee include the use of skill and prudence which an ordinary capable
and careful person will use in the conduct of his own affairs, and loyalty to the beneficiaries of the trust.
Neither can [*21] an exculpatory provision in the trust instrument be effective to relieve the trustee of
liability for action taken in bad faith or for acting intentionally adverse or with reckless indifference to the
interests of the beneficiary.
For over a year from the time Donald assumed the responsibility of trustee, he did not make the quarterly
distributions of income to appellee mandated by the terms of the will. It was not until appellee hired a lawyer
to make demands on Donald to make the distributions that Donald made some distributions to appellee of
some of the income of the marital deduction trust. Donald cut back the hourly wage of appellee's medical
attendant from $ 6.00 per hour to $ 5.50 per hour, saying there was not enough money to cover the expenses of
appellee's maintenance. However, he made $ 10,000 cash gifts out of the marital deduction trust to himself,
Roger, and their families. This had the effect of minimizing the income distribution to appellee. Donald
admitted he did not distribute to appellee all the income that had been earned from the marital deduction trust.
He paid out of the marital deduction trust funds, the legal fees to defend himself and Roger against appellee's
[*22] lawsuit for defrauding appellee of the control of appellee's assets.
Appellee's attorney asked Donald for supporting documentation concerning the assets in the trust and
transactions on the trust and received from Donald two grocery bags of bank statements. He did not receive
balance statements or any books on the trusts. The accounts were all commingled, and the records were
disorganized. Donald admitted he did not even know how much income per month was generated from the
marital deduction trust.
We hold there was sufficient evidence to support the jury's findings of breach of fiduciary duty, selfdealing,
and malice.
In their sixth point of error, appellants contend the trial court erred in its award of prejudgment interest for
mental anguish in the judgment.
The judgment awards prejudgment interest on the amount awarded for mental anguish commencing June 9,
1987, the date the fraud was committed. [HN15] Under the rule announced in Cavnar v. Quality Control
Parking, Inc., 696 S.W.2d 549, 555 (Tex. 1985), prejudgment interest accrues beginning six months after the
date the cause of action accrues. The Cavnar rule has been applied to intentional tort and fraud cases, Voskamp,
749 S.W.2d [*23] at 124. The cause of action in this case accrued June 9, 1987. Therefore, prejudgment
interest on damages for mental anguish began to accrue on December 9, 1987.
We sustain appellants sixth point of error.
In point of error seven, appellants contend the trial court erred in failing to award appellants' attorney's fees
for a groundless and bad faith or harassment suit under the Deceptive Trade Practices Act (DTPA), TEX. BUS.
& COM. CODE ANN. § 17.50(c) (Vernon 1987). Under Donwerth v. Preston II Chrysler-Dodge, Inc., 775
S.W.2d 634, 637 (Tex. 1989), the court must determine if the DTPA action was groundless, brought in bad
faith, and for the purposes of harassment. Appellants did not request the court to make a finding on the bad
faith DTPA issue. Therefore, they have waived any such claim. TEX. R. APP. P.52(a).
We overrule appellants seventh point of error.
We reform the judgment to reflect December 9, 1987, as the date from which prejudgment interest runs on
the mental anguish award and affirm the judgment as reformed.
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