Opinion
I. INTRODUCTION
This appeal arises out of a Probate Code sections 850 and 859 petition by two residuary trust beneficiaries—the Regents of the University of California and the Make-A-Wish Foundation of Greater Los Angeles—for restitution of funds. Objector, David Kraus, appeals from a December 19, 2008 judgment and orders after a court trial. 1 The probate court ordered David to return $197,402 to a court-appointed representative of the estate of Janice Helene Kraus and to pay statutory double damages of $394,804. (Prob. Code, §§ 850 et seq., 859.) (All further statutory references are to the Probate Code unless otherwise noted.) We affirm the judgment.
II. BACKGROUND
A. Pleadings
The two beneficiaries filed an August 29, 2007 petition for transfer and return of property. The two beneficiaries alleged as follows. Janice had executed a will on December 9, 2003. On December 9, 2003, the Janice
The two trust beneficiaries sought to recover the misappropriated funds. The two beneficiaries also sought restitution from California National Bank for turning over the funds to David. The present appeal does not involve any claims against California National Bank. In his March 4, 2008 response to the petition, David denied he was guilty of any wrongdoing.
B. Evidence
A court trial commenced on July 28, 2008. At issue were moneys in Janice’s accounts; funds withdrawn by David under a void power of attorney on October 23, 2006. Janice died the next day on October 24, 2006. The bank accounts in question, and the amounts David withdrew, were as follows: four California National Bank certificates of deposit naming Janice and David’s mother, Irene, as beneficiary in the amounts of $18,432.24, $28,929.43, $44,061.56, and $51,252.80; $9,385.07 from Janice and Irene’s Wells Fargo Bank joint checking account; and $14,767.93 from Janice’s Washington Mutual Bank checking account.
Janice’s attorney, Jack A. Thompson, testified as follows. Janice signed her will on December 9, 2003. Janice’s will provided the funds in her bank accounts would pour over into her trust. The beneficiary of Janice’s will was the trust. Janice executed the trust instrument on December 9, 2003. The trust was amended on May 12, 2005. The beneficiaries were each to receive 50 percent of the trust residue. Mr. Thompson became the trustee of the trust upon Janice’s death on October 24, 2006. Janice had disinherited David for two reasons. First, he had a bad temper and she was afraid of him. Second, he had refused to return $160,000 that Irene had given him to hold for her benefit. Mr. Thompson had prepared Irene’s estate plan as well as Janice’s. The money in the accounts at issue belonged to Janice and not to Irene.
On November 9, 2006, after Janice’s October 24, 2006 death, Mr. Thompson began marshalling the trust assets. On November 9, 2006, Mr. Thompson learned that David had gained access to Janice’s bank accounts through a
Irene, Janice and David’s mother, died on March 10, 2007, prior to the court trial. At 91 years of age, Irene received Medicare and Social Security benefits. Also, Irene was the beneficiary of Janice’s $20,000 life insurance policy. Further, Irene was a beneficiary of Janice’s pension plan. In Mr. Thompson’s opinion, Irene’s future care was adequately funded under her estate plan.
Irene had also disinherited David in the event he survived Janice. In her will, Irene demanded that David and his wife return $160,000. Irene’s June 2, 2005 will included the following provision: “I have given during my lifetime certain sums of money to DAVID S. KRAUS and my daughter-in-law JOAN L. KRAUS to be held as custodians for my benefit. These sums, as of the date of this Will, are in the approximate amount of $160,000.00. I hereby order that such funds, including any increases thereon, be made a part of the residue of my estate and be distributed as per Paragraph Fifth of this, my Will.” David never returned the $160,000 referenced in Irene’s will to her. Irene made no such demand on Janice. On November 11, 2006, Irene executed her trust declaration, which gave David any assets held under that instrument.
David testified. David admitted using a “General Power Of Attorney,” executed on October 22, 2006, to take the funds in Janice’s accounts. David prepared the power of attorney on October 22, 2006. David saw no reason to contact Mr. Thompson, the successor trustee, about preparing a power of attorney. Nor could David remember speaking with Janice’s physicians as to whether she had the capacity to sign the power of attorney. On October 22, 2006, Janice was semiconscious and undergoing hospice care when an “X”
David went to the bank to secure the jewelry the day before Janice died. Also, David, using the power of attorney, closed the bank accounts at issue on October 23, 2006, the day before Janice’s death. The funds secured under the power of attorney were placed in accounts in the name of David and his wife. No funds taken by David on October 23, 2006, under the power of attorney were ever placed in Irene’s accounts. Funds from one of the accounts were used to purchase a certificate of deposit in the names of David and his wife. Moreover, David named his daughter as the beneficiary of the new accounts. One institution, Citibank, refused to honor the power of attorney as to one of two accounts.
David first disclosed the existence of the power of attorney to Mr. Thompson on December 15, 2006. In a December 15, 2006 letter, David claimed that if he had not taken the money, none would be left for Irene’s care and would be given away. David intended to use the power of attorney to pay Janice’s health care and funeral expenses as well as to provide care for Irene. No money taken by David was used for Janice’s health care expenses. A bank official testified that Irene was the beneficiary of certain accounts held by Janice. After counsel for one of the beneficiaries demanded the funds be repaid, David threatened to expose their greed to the media. David further also wrote: “I am prepared to expose this entire ugly matter in open court. If you think you can bully me into anything, you are truly mistaken. I know the law very well, and you have no standing in the eyes of the court. [][] Once you bring this ridiculous matter in front of the judge, you will forever be prejudiced in front of her before you begin any new trial. It’s a small circle of players in Probate in Los Angeles, and judges have a long memory for anyone that engages in this fraudulent activity. You will long be remembered in her court.”
C. The Probate Court’s Ruling and Judgment
The probate court found the power of attorney drafted by David on October 22, 2006, was void and David wrongfully and in bad faith converted
III. DISCUSSION
A. Sections 850 and 859
Sections 850 to 859 are in division 2, part 19 of the Probate Code, which governs conveyances or transfers of property claimed to belong to a decedent or other person. Section 850 provides in part: “(a) The following persons may file a petition requesting that the court make an order under this part: [][] . . . [f] (2). . . [A]ny interested person in any of the following cases: [(][] . . . (C) Where the decedent died in possession of, or holding title to, real or personal property, and the property or some interest therein is claimed to belong to another. [][] (D) Where the decedent died having a claim to real or personal property, title to or possession of which is held by another.”
Section 859 provides for recovery of twice the value of property taken in bad faith. (§ 859;
Estate of Young, supra,
160 Cal.App.4th at pp. 86-87;
In re Pereira and Melo Dairy
(Bankr. E.D.Cal. 2005)
B. David’s Argument He Should Not Be Required to Deliver $197,402 to a Court-appointed Personal Representative of Janice’s Estate Pursuant to Section 850 Is Without Merit
David concedes that the power of attorney was invalid. David further concedes the probate court properly determined, “[T]he designations of ownership and/or testamentary intent in effect at the time [Janice purportedly executed the power of attorney] shall determine entitlement to the accounts in question.” (See
Estate of Stephens
(2002)
We review questions as to the jurisdiction and authority of the probate court de novo.
(Conservatorship of Kane
(2006)
First, David argues the probate court should have denied the section 850 petition because the beneficiaries did not prove they had any right to the funds. As noted above, under section 850, any interested person can request that the probate court order a conveyance or transfer of property under specified circumstances, including: “[w]here the decedent died in possession of, or holding title to, real or personal property, and the property or some interest therein is claimed to belong to another” (§ 850, subd. (a)(2)(C)) or “[w]here the decedent died having a claim to real or personal property, title to or possession of which is held by another” (§ 850, subd. (a)(2)(D)). Section 850, by its clear and plain terms, does not require the probate court to find that the property in question belongs to the interested petitioning party. Here, the trust beneficiaries sought an order requiring David to relinquish misappropriated property. That it is unclear who is entitled to the property does not deny the beneficiaries of their interest in its rightful disposition—even if, ultimately, it does not go to the trust.
Nor did the probate court, as David asserts, exceed its jurisdiction by ordering “damages” paid to an unnamed personal representative of Janice’s estate. As discussed above, the probate court placed the misappropriated funds, together with the statutory penalty, in Janice’s estate for a future determination of their proper disposition. As noted previously, pursuant to section 856, “[I]f the court is satisfied that a conveyance, transfer, or other order should be made, the court shall make an order authorizing and directing ... the person having title to or possession of the property, to execute a conveyance or transfer to the person entitled thereto,
or granting other appropriate relief.”
(Italics added.) Section 856 clearly and unambiguously grants the probate court the power not only to order a conveyance or transfer to the person entitled to the property in question, but also to
grant
Finally, David contends that because the bank accounts were beneficiary accounts, the funds should be distributed by operation of law outside any probate; and he should retain the funds unless and until someone proves, by clear and convincing evidence (§ 5302), a better claim to them. As noted above, when David closed Janice’s accounts and took her money, she was still alive. The bank accounts have been closed and no longer exist. Additionally, there was evidence Janice intended that the money in the bank accounts would pour over into her trust, notwithstanding the manner in which the accounts were held. And the probate court could reasonably find David, who has been found to have in bad faith wrongfully taken the money, has no right to retain the funds.
C. There Is No Merit to David’s Arguments Concerning the Section 859 Penalty
David has made a series of shifting arguments with respect to the civil penalty imposed under section 859. In the trial court, although the beneficiaries’ petition explicitly sought a civil penalty, David’s written response did
In a closely related argument, David asserts the probate court did not award any damages to the trust beneficiaries, therefore no section 859 penalty could be imposed. Section 850 et seq. does not contemplate an
award
of
damages
to anyone. The statutory scheme’s purpose is to effect a conveyance or transfer of property belonging to a decedent or a trust or another person under specified circumstances, to grant any appropriate relief to carry out the decedent’s intent, and to prevent looting of decedent’s estates. (§ 856;
Estate
David further asserts the “punitive damage award” must be reversed because the amount of “actual or compensatory damages” awarded to the beneficiaries (zero) bore no rational relation to the “punitive damages” ($394,804). This argument proceeds from a misdescription of the underlying facts. No actual or compensatory damages were awarded to anyone. And, if we were to adopt David’s terms, the amount of “actual or compensatory damages” was not zero, it was the amount of money he misappropriated, $197,402. Even assuming the comparison David suggests is an appropriate one under the law, David does not contend the statutory penalty, $394,804, bore no rational relation to the value of the property recovered, $197,402.
David argues the section 859 penalty would be excessive because it is disproportionate to his ability to pay, but the trust beneficiaries did not introduce evidence of David’s financial condition. The ability to pay argument was not raised in the probate court. Even if the issue were properly raised, we would conclude David’s financial condition under these circumstances was not a relevant consideration. The Courts of Appeal have held evidence of a defendant’s financial status is not essential to the imposition of statutory penalties, and financial inability to pay is a matter to be raised in mitigation.
(Los Angeles County Metropolitan Transportation Authority v. Superior Court
(2004)
The December 19, 2008 judgment is affirmed. Petitioners, Make-A-Wish Foundation of Greater Los Angeles and the Regents of the University of California, are to recover their costs on appeal from the objector, David Kraus.
Armstrong, J., and Mosk, J., concurred.
Notes
For purposes of clarity, and not intending any disrespect, we refer to members of the Kraus family by their first names.