Opinion
A146810
04-06-2017
ESTATE OF DANA MOFFATT, Deceased. GEORGE MOFFATT et al., Plaintiffs and Appellants, v. JOHN BALQUIST, Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Alameda County Super. Ct. No. RG15773093)
Dana Moffatt died on November 10, 2010. More than four and a half years later, appellants George Moffatt (Dana's ex-husband) and George Simpson (when referred to collectively, appellants) filed a complaint for breach of contract to make a will against respondent John Balquist, trustee of the Dana Moffatt 2005 Revocable Trust and executor of Dana's estate. The claim stemmed from an alleged promise by Dana to grant appellants a life estate in her house in exchange for them providing care for her until her death.
Balquist demurred, asserting among other arguments that appellants' claim was barred by Code of Civil Procedure section 366.3, which provides that a claim arising from a promise for a distribution from an estate must be commenced within one year after the decedent's death. (Code Civ. Proc., § 366.3, subd. (a).) In opposition, appellants argued that Balquist should be equitably estopped from asserting a statute of limitations defense.
The trial court sustained the demurrer without leave to amend, concluding among other things that the doctrine of equitable estoppel did not apply. We reach the same conclusion, and affirm.
ALLEGATIONS IN THE COMPLAINT
George Moffatt and Dana Moffatt were married in July 1959. In 1969, they purchased a home at 2738 Grant Street in Berkeley (the Moffatt home). Although they paid for and owned the property together, they decided to place title in Dana's name alone. They had one child together, a son named Kristian Moffatt, who was disabled.
As is typical in matters where parties share a common surname, we refer to George, Dana, and Kristian by their first names. We refer to all others by surname.
In 1976, George and Dana amicably divorced, after which they continued to live together in the Moffatt home. They intended to keep the house in Dana's name, with the understanding they both still owned it and George would live there until his death. George continued to pay an equal or greater share of the mortgage until it was entirely paid off, even taking out a $22,000 personal loan to pay it off. After the mortgage was paid off, he continued to pay an equal portion of the property insurance and taxes. George and Dana also publicly acknowledged their joint ownership of the Moffatt home.
In July 1999, Dana executed a will (1999 will) in which she gave George a life estate in the Moffatt home. George agreed to provide care for Dana as her health declined and to financially support the Moffatt home, which he would not have done if she had not promised to grant him a life estate. Dana also gave Simpson a life estate, and Simpson agreed to provide care for Dana, which he would not have done if she had not promised to grant him a life estate.
In approximately 2004, George began to worry that when he and Dana died, Kristian's receipt of public benefits would be adversely affected if he inherited the Moffatt home. George discussed his concern with Dana, who agreed they should do something. They consulted estate planning attorney Susan Cohen, whom they found through an attorney referral service. The attorney referral paperwork identified George as one of the two individuals referred to Cohen. Because Dana was wheelchair-bound by that time, appellants made arrangements to take her to each meeting with Cohen.
At their first meeting, George and Dana explained to Cohen their need for a special needs trust for Kristian. Cohen agreed to prepare one, and George believed she was representing both him and Dana and would protect their interests. Despite that George and Dana told Cohen at their first meeting that George had a financial interest in the Moffatt home, Cohen secretly represented only Dana.
Appellants believe they were present at a January 5, 2005 meeting at Cohen's office when Cohen explained to Dana's family and close friends how the special needs trust would work. At the end of the meeting, George and Dana believed they could rely on Cohen's legal work and were relieved the necessary precautions had been put in place. When they left the meeting, they had a copy of the Dana Moffatt 2005 Revocable Trust (2005 trust). That day Dana had also signed a pour-over will (2005 will). No one, including Dana, was aware at that time of the newly-signed 2005 will.
In March 2005, Cohen sent bills for her legal work to Simpson, who paid them. She did not, however, prepare a fee agreement, so George was unaware she had decided to represent only Dana and not him.
Cohen never disclosed that her work for Dana would revoke appellants' property rights in the Moffatt home. Cohen never disclosed to Dana in writing, other than preparing the 2005 will itself, that she was preparing a new will for Dana. And she never disclosed to Dana in writing that the new will would eliminate Dana's 1999 bequests of life estates to appellants.
As noted, Dana died in November 2010. At that time, appellants believed the 1999 will (the only one they knew about) was valid and they both held a life estate in the Moffatt home. For more than two years, they continued paying the property insurance and taxes on the Moffatt home consistent with their understanding of their duties as life tenants. In the 30 months following Dana's death, appellants did not hear anything from Kristian or the trustee of the special needs trust, which they believed would not come into possession of the Moffatt home while they were still alive.
In the summer of 2013, Karen Gautreaux, a family member and then trustee of the 2005 trust, contacted appellants and asked them to visit with an insurance agent regarding the Moffatt home. Gautreaux said she wanted to discuss insurance, but when she arrived, she had a real estate agent with her. She gave no explanation for the real estate agent's presence but, on information and belief, she listed the Moffatt home for sale shortly thereafter or had already done so by the time of the visit.
In May 2013, appellants found a notice of termination of tenancy and notice of sale and entry on their door. This was the first notice they received that they might not have a life estate in the property. At no time between Dana's death and Gautreaux's listing of the property for sale did appellants receive any indication they did not hold life estates, as evidenced by their payment of taxes and insurance for the home and their making of repairs and improvements.
Gautreaux was aware that George had a serious health condition during the two years following Dana's death. She intentionally concealed the terms of the 2005 will during those two years for the purpose of preventing appellants from asserting their rights, and in the hope that the incapacitation or death of one or both appellants would prevent assertion of their rights. The meeting arranged by Gautreaux and the posting of the notice of termination of tenancy occurred mere months after George informed his family, including Gautreaux, that he was in remission and his health was improving.
By signing the 2005 will on January 5, 2005, Dana materially breached her contract with appellants, causing economic damages to them by removing their life estate in the Moffatt home.
PROCEDURAL BACKGROUND
On June 5, 2015, appellants filed a verified complaint against John Balquist, as successor trustee of the 2005 trust and as executor of Dana's estate. George was 81 years old at the time, Simpson 69. The complaint alleged one cause of action, for breach of contract, based on an allegation that Dana breached her contract with appellants by failing to perform her 1999 promise to bequeath them a life estate in the Moffatt home.
On July 20, Balquist demurred on five separate grounds, arguing that the claim for breach of contract: (1) was barred by the statute of limitations set forth in Code of Civil Procedure section 366.3 (section 366.3); (2) failed to state facts sufficient to constitute a cause of action pursuant to Probate Code section 21700 ; (3) was barred by the doctrines of res judicata and collateral estoppel because appellants were seeking relief from the same defendant on an issue decided against them in Alameda County Superior Court case no. RP13703351; (4) failed to state facts sufficient to constitute any cause of action because it did not allege any legal basis for ownership of property belonging to a trust; and (5) was barred by the doctrine of laches.
Probate Code section 21700 is the statute of frauds applicable to contracts to make a will.
Balquist's demurrer also requested that the court take judicial notice of the following documents: (1) a November 15, 2013 petition for probate (Alameda County Superior Court case no. RP13703351) filed by Simpson in which he sought the admission of Dana's 1999 will into probate and his appointment as executor; (2) Balquist's December 2, 2013 objection to Simpson's petition, in which he objected that the 1999 will was invalid because Dana revoked it by executing the 2005 will and because it was marked as a draft such that it was not a valid testamentary instrument; (3) appellants' objections and first amended objections to Balquist's petition to probate the 2005 will; (4) an October 23, 2014 order during trial in case no. RP13703351 in which the court ordered appellants to begin paying rent to occupy the Moffatt home and noted that appellants had withdrawn four of the grounds for their objection to Balquist's petition; (5) a January 9, 2015 order after trial in case no. RP13703351 in which the court overruled appellants' objections to the 2005 will, admitted the 2005 will into probate, and appointed Balquist as the administrator with will annexed; and (6) the 2005 will, a grant deed dated September 25, 1969 showing that Dana bought the Moffatt home as "a married woman, as her separate property," and a quitclaim deed showing that on June 13, 1986, Dana quitclaimed the Moffatt home to the Dana Moffatt Trust.
The petition attached a copy of the 1999 will, every page of which was marked by a word "draft" across the text.
On August 14, 2015, appellants filed opposition to Balquist's demurrer. They conceded that the statute of limitations set forth in section 366.3 applied to the action and that "the present action is facially beyond the one year time-bar." They argued, however, that the doctrine of equitable estoppel precluded Balquist from asserting the statute of limitations because Balquist and others concealed the fact that appellants were not granted a life estate under the 2005 will for over two years after Dana's death. Appellants also argued that: (1) res judicata and collateral estoppel did not apply because they were not, as Balquist argued, " 'attempting to again validate the Decedent's 1999 will, an issue already decided by the Probate Court' " but were instead alleging that by making the 2005 will, Dana breached her contract with them to leave them life estates in the Moffatt home; (2) the equitable remedy they were seeking—a constructive trust granting them a life estate—was an enforceable claim to ownership of property held in an existing trust; and (3) laches was inapplicable as they had alleged sufficient facts demonstrating good faith and reasonable diligence.
Appellants requested leave to amend in the event the court sustained the demurrer, and they requested the court deny a motion by Balquist to transfer the action to probate court for consolidation with the probate matter because there was no common question of law or fact.
On August 19, Balquist filed a reply, along with a request for judicial notice of four documents: the register of actions in that case and three documents in two probate actions.
Following the close of briefing, the court issued a tentative ruling sustaining the demurrer without leave to amend. Appellants contested the tentative ruling, and on August 26, the matter came on for hearing, at the conclusion of which the court ruled that it was going to affirm the tentative ruling. A lengthy order to that effect was entered that day. It provided in pertinent part as follows:
"Defendant demurs on a number of grounds including that the complaint's single cause of action for breach of contract is barred by Code of Civil Procedure section 366.3(a), which provides that '[i]f a person has a claim that arises from a promise or agreement with a decedent to distribution from an estate or trust or under another instrument, whether the promise or agreement was made orally or in writing, an action to enforce the claim to distribution may be commenced within one year after the date of death, and the limitations period that would have been applicable does not apply.' (Code. Civ. Proc. § 366.3(a).) This period may not be tolled. (Id. § 366.3(b).) Here, the complaint alleges that the Decedent died on November 10, 2010, so the complaint, filed almost five years later on June 5, 2015 is clearly time-barred.
"In opposition, Plaintiffs concede that section 366.3(a) of the Code of Civil Procedure applies, and they also concede that the one year period cannot be tolled or extended, but Plaintiffs argue that Defendant should be equitably estopped from asserting the statute of limitations. '[E]quitable estoppel comes into play only after the limitations period has run to preclude a party from asserting the statute of limitations as a defense to an untimely action where the party's conduct has induced another into forbearing to file suit.' (McMackin v. Ehrheart (2011) 194 Cal.App.4th 128, 140, citing Battuello v. Battuello (1998) 64 Cal.App.4th 842, 847.)
"Under the circumstances of this case, equitable estoppel does not apply . . . . First, the complaint contains no allegations that Defendant did anything to induce Plaintiffs to forebear from filing the instant lawsuit. Plaintiffs argue that it was 'impossible' for them to file suit within the limitations period because Defendant concealed the existence of the 2005 will from them. However, Plaintiffs state they became aware of the 2005 will about 'two years after the Decedent passed away.' [Citation.] As Plaintiffs themselves acknowledge, when they made the discovery that the 2005 will deprived them of a life estate, they actually did file a suit. They initiated a will contest in probate court, seeking to have the 1999 will declared valid and the 2005 will declared invalid. [Citation.] In these circumstances, the court concludes that if Plaintiffs had an equitable period in which to bring this lawsuit, such period expired when they chose to litigate the issues in probate court. [¶] . . . [¶]
The order also concluded that appellants' claim was barred by the doctrines of collateral estoppel and res judicata.
"Because the court finds that Plaintiffs' claims are barred, the court need not address Defendant's other arguments.
"Leave to amend is denied because there is no possibility Plaintiffs can amend in a manner that would avoid the statute of limitations or the bar imposed by the doctrine of res judicata or collateral estoppel. Plaintiffs request leave to amend to assert a claim of promissory estoppel [citation], but that claim would also be barred by section 366.3(a) of the Code of Civil Procedure and the doctrine of res judicata because it would be a claim that arises from a promise or agreement with the Decedent and any alleged promises have been revoked by the 2005 will. Plaintiffs also refer to seeking a constructive trust but this equitable remedy can have no independent viability where Plaintiffs' other causes of action are time-barred. [Citation.]"
The court dismissed appellants' complaint with prejudice, and judgment of dismissal was entered on September 11, 2015. This appeal followed.
On July 5, 2016, appellants filed their opening brief, as well as a request for judicial notice of two documents. The first document was a motion in limine in case no. RP13703351 in which they requested leave to file their second amended objections to Balquist's petition, which they claimed would show they attempted to assert their rights in the probate action. The second was the minutes of an October 20, 2014 hearing in case no. RP13703351, reflecting the probate court's denial of their request.
Balquist responded with two requests for judicial notice of his own, seeking judicial notice of six documents from the probate matters and three from an unlawful detainer action to regain possession of the Moffatt home.
We granted both requests for judicial notice.
DISCUSSION
Standard of Review
In Animal Legal Defense Fund v. California Exposition & State Fairs (2015) 239 Cal.App.4th 1286, 1294, we set forth the standard of review applicable here: "The standard of review governing an appeal from a demurrer sustained without leave to amend is well established. As we summarized in Chiatello v. City and County of San Francisco [(2010)] 189 Cal.App.4th [472,] 480: ' "Because this case comes to us on a demurrer for failure to state a cause of action, we accept as true the well-pleaded allegations in plaintiffs' . . . complaint. ' "We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] We also consider matters which may be judicially noticed." [Citation.] Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. [Citation.]' " [Citation.] We likewise accept facts that are reasonably implied or may be inferred from the complaint's express allegations. [Citations.] " ' "A demurrer tests the legal sufficiency of the complaint . . . ." [Citations.] On appeal from a dismissal after an order sustaining a demurrer, we review the order de novo, exercising our independent judgment about whether the complaint states a cause of action as a matter of law. [Citations.] When the trial court sustains a demurrer without leave to amend, we must also consider whether the complaint might state a cause of action if a defect could reasonably be cured by amendment. If the defect can be cured, then the judgment of dismissal must be reversed to allow the plaintiff an opportunity to do so. The plaintiff bears the burden of demonstrating a reasonable possibility to cure any defect by amendment. [Citations.]' " [Citation.]' "
Appellants' Claim Is Barred by the Statute of Limitations
Section 366.3, subdivision (a), provides: "If a person has a claim that arises from a promise or agreement with a decedent to distribution from an estate or trust or under another instrument, whether the promise or agreement was made orally or in writing, an action to enforce the claim to distribution may be commenced within one year after the date of death, and the limitations period that would have been applicable does not apply." Appellants concede this section would generally bar their claim, since Dana died in November 2010 and they filed their complaint in June 2015. They contend, however, as they did below, that Balquist should be equitably estopped from asserting the statute of limitations bar. This is so, they reason, because his "wrongful conduct made it impossible" for them to file suit within the one-year limitation provided by section 366.3, subdivision (a).
Section 366.3, subdivision (b), provides that subject to certain exceptions not applicable here, the limitation period set forth in subdivision (a) "shall not be tolled or extended for any reason." However, it has been held that this provision does not preclude a plaintiff from invoking the doctrine of equitable estoppel to prohibit the defendant from asserting the one-year limitation period. Indeed, the court in McMackin v. Ehrheart, supra, 194 Cal.App.4th at p. 140 considered this very question and held that "depending upon the circumstances of each case, the doctrine of equitable estoppel may preclude the application of section 366.3." (See also Lantzy v. Centex Homes (2003) 31 Cal.4th 363, 383-384 ["[E]quitable estoppel is available even where the limitations statute at issue expressly precludes equitable tolling."]; Battuello v. Battuello, supra, 64 Cal.App.4th at p. 847 [recognizing distinction between equitable estoppel and tolling].) The question, then, is whether appellants alleged sufficient facts warranting the application of equitable estoppel such that the filing of their complaint in June 2015 was timely. We conclude they did not.
"The basic principles of equitable estoppel are well established and easily stated. 'Whenever a party has, by his own statement or conduct, intentionally and deliberately led another to believe a particular thing true and to act upon such belief, he is not, in any litigation arising out of such statement or conduct, permitted to contradict it.' (Evid. Code, § 623.)" (Honeywell v. Workers' Comp. Appeals Bd. (2005) 35 Cal.4th 24, 37.) According to the California Supreme Court, the doctrine of equitable estoppel generally consists of the following four elements: "(1) the party to be estopped must be apprised of the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel had a right to believe it was so intended; (3) the other party must be ignorant of the true state of facts; and (4) he must rely upon the conduct to his injury." (City of Long Beach v. Mansell (1970) 3 Cal.3d 462, 489.)
Other courts have described five elements. (See, e.g., Stephens & Stephens XII, LLC v. Fireman's Fund Ins. Co. (2014) 231 Cal.App.4th 1131, 1149.) --------
Appellants point to the following allegations in their complaint as sufficient to invoke the equitable estoppel doctrine: Balquist's predecessor trustee (Gautreaux) was aware of the 2005 will and knew it did not grant appellants a life estate or any other property interest in the Moffatt home. She concealed this fact from them and let them take on all the responsibilities, burdens, and benefits that a life estate would entail, including paying property taxes, paying for insurance, maintaining the property, and living at the property. She knew George was facing a serious illness and was hoping to avoid a legal challenge from the man who had moved into the home with Dana, paid at least half the mortgage, and lived there for over 40 years. She only informed appellants they had no right to live in the Moffat home after George informed his family (including Gautreaux) that his cancer was in remission, approximately 30 months after Dana's death. And by failing to inform appellants about the provisions of the 2005 will within one year of Dana's death, Gautreaux prevented them from filing suit within the time period provided by section 366.3, subdivision (a). We do not read those allegations as meeting all the elements of equitable estoppel—for example, no intent by the trustee to have her conduct acted upon, or that appellants were ignorant of the facts.
But even assuming for argument's sake these allegations were sufficient to invoke the equitable estoppel doctrine, appellants' complaint was still untimely. This is so because Balquist would not be estopped in perpetuity from asserting a statute of limitations defense. Rather, once appellants learned that Dana executed a will that did not bequeath them a life estate, the one-year time limit set forth in section 366.3, subdivision (a), necessarily began to run. By appellants' own admission, they learned they may not have a life estate in the Moffatt home no later than May 9, 2013. Accordingly, they had until May 8, 2014 to bring their claim alleging breach of contract to make a will. They failed to do so, waiting until June 2015, more than a year later. This was untimely. (See Bernson v. Browning-Ferris Industries (1994) 7 Cal.4th 926, 936 ["The rule of equitable estoppel includes, of course, the requirement that the plaintiff exercise reasonable diligence."].)
Appellants dispute this conclusion, contending that the one-year statute of limitations did not start to run until the probate court determined which will was valid. As they would have it, if they had succeeded in having the 1999 will admitted into probate, then Dana had not in fact breached their agreement and they had no cause of action. Only after the court validated the 2005 will and rejected their creditor's claims did they know Dana breached their contract, giving rise to their claim asserted in this action. In other words, they contend, the limitations period was tolled pending outcome of the trial in the probate action. This argument must fail, in light of the clear language of section 366.3, subdivision (b)—"shall not be tolled or extended for any reason"—that expressly forbids any such tolling.
Appellants request leave to amend so they can either "allege any additional pertinent true facts that support their claim to equitable relief" or "inclu[de] or substitut[e] a cause of action for promissory estoppel" if the breach of contract to make a will claim is fatally defective. Appellants identify no facts they could allege that would state a claim not barred by section 366.3, subdivision (a). They have thus failed to carry their burden of proving that an amendment would cure the defect. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
DISPOSITION
The judgment of dismissal is affirmed.
/s/_________
Richman, J. We concur: /s/_________
Kline, P.J. /s/_________
Stewart, J.