RICHARD TASH v. HARRIET GOLDFARB

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Court of Appeal, Second District, California.

RICHARD TASH et al., Plaintiffs and Respondents, v. HARRIET L. GOLDFARB, Defendant and Appellant.

B217820

Decided: June 25, 2010

Law Office of Michael J. O'Brien and Michael J. O'Brien for Defendant and Appellant. Brown & Associates and Matthew C. Brown for Plaintiffs and Respondents.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

INTRODUCTION

The executor of the estate of Elaine Tash appeals from a judgment which found that while alive, Elaine Tash violated her fiduciary duty to beneficiaries of the Tash Family Trust and was subject to a surcharge of the amount of money remaining in the decedent's trust.   The executor makes no claim that the evidence was not sufficient to support the judgment.   Instead, the executor claims that the beneficiaries' petition to determine ownership of property, construction of terms of trust, accounting of trust assets, and liability and damages for breaches of fiduciary duty and for conversion was barred by the statute of limitations in Code of Civil Procedure section 366.2.   The executor's failure to timely raise this defense in the trial court, however, forfeits the claim on appeal.   The executor has also not shown that the petition was untimely filed pursuant to Probate Code section 9353, subdivision (a)(1).1  We further conclude that the petition was properly brought against the estate of Elaine Tash pursuant to section 850.   We affirm the judgment.

FACTUAL AND PROCEDURAL HISTORY

Richard Tash, Lawrence Tash, and Brian Tash are the children of Jack Tash, who was the spouse of Elaine Tash. Richard Tash, Lawrence Tash, and Brian Tash (the beneficiaries) are also the beneficiaries of the Tash Family Trust (the Trust), created by Jack Tash and Elaine Tash before Jack Tash's death on November 1, 2004.   Elaine Tash died on February 2, 2006.   Decedent Elaine Tash's probate estate was administered in Los Angeles County Superior Court.   On September 29, 2006, the beneficiaries filed a creditor's claim against the Estate of Elaine Frances Tash. Their creditor's claim alleged that some or all of the assets in Elaine Tash's probate estate belonged to the Trust, that Elaine Tash wrongfully removed assets from the Trust before her death, and that Elaine Tash was liable to the beneficiaries for wrongful removal of those assets from the Trust in an amount exceeding $3 million.

Also on September 29, 2006, Brian Tash, as Successor Trustee of the Trust, filed a Creditor's Claim against the Estate of Elaine Frances Tash, which alleged the same facts and the same liability.

Harriet Goldfarb, the personal representative of the Estate of Elaine Frances Tash, rejected both Creditor's Claims on July 5, 2007.

On September 27, 2007, the beneficiaries filed a petition for determination of ownership of property, construction of terms of trust, accounting of and for trust assets, for breaches of fiduciary duty by Elaine Tash, and for conversion of trust assets by Elaine Tash. The petition alleged that assets were transferred to the Trust before the deaths of Jack Tash and Elaine Tash, some of which were community property of Jack Tash and Elaine Tash and some of which were Jack Tash's separate property as of the date of his death.   The petition alleged that after Jack Tash died, Elaine Tash, as Trustee, improperly removed assets from the Trust and improperly sold those assets.   Assets allegedly improperly removed from the Trust included properties at 4825 and 4827 Huntington Drive, Los Angeles and at 1147 Volante Drive, Arcadia, allegedly valued at more than $2,250,000 at the time of Jack Tash's death.   The petition alleged that 4825 Huntington Drive and 4827 Huntington Drive were improperly sold for more than $1,425,000, that the whereabouts of proceeds of the sale of the two properties was unknown and had been and continued to be deliberately concealed from the beneficiaries by Elaine Tash and by the personal representative of her probate estate.   The petition alleged that the Elaine Tash probate estate presently held 1147 Volante Drive in Arcadia.   The petition alleged that the beneficiaries had suffered substantial economic damage as a result of Elaine Tash's improper removal of Trust assets.

The petition requested that the court make determinations and orders that Brian Tash was the trustee of the Trust;  that the 1996 Trust Instrument, as amended by the 2004 Trust Instrument, governed the Trust;  that the personal representative of the Elaine Tash probate estate must account for Elaine Tash's acts and transactions concerning the Trust and Trust assets after Jack Tash's death;  that assets held in the Trust at the time of Jack Tash's death, and proceeds from the sale of such assets, should have remained in the Trust and should have been held and administered pursuant to its terms, up to and including the date of Elaine Tash's death, except to the extent that such assets or income derived from them were properly distributed to Elaine Tash for her support, care, and maintenance in accordance with the terms of the Trust;  that assets improperly removed from the Trust, including any properly now held in the Elaine Tash probate estate, must be delivered to Brian Tash as trustee of the Trust, to be held, administered and distributed by him as trustee of the Trust;  that Elaine Tash should be liable for all damages caused by her breaches of fiduciary duty, plus interest;  and that Elaine Tash, and any person who assisted her, should be liable for twice the value of any Trust assets wrongfully and in bad faith taken, concealed or disposed of by her.

On October 29, 2007, Harriet Goldfarb, executor of the estate of Elaine Frances Tash, filed objections to the petition.   Goldfarb's objections alleged that there was no wrongful transfer, for several reasons.   First, the Trust did not specify that the Volante Drive property must remain in the Trust irrevocably until the second settlor's death.   Second, the Trust required the Trustee to separate Trust assets into two separate trusts, each to be administered separately, and thus Elaine Tash's transfer of the Volante Drive property into the Survivors Trust was correct.   Third, Section 1(c)(3) of the Trust reserved to Elaine Tash the decision to revoke the Survivors Trust.   Fourth, while alive Elaine Tash paid the beneficiaries $600,000, the corpus of the Decedent's Trust, giving up her right to retain income from that sum as surviving Settlor.

Goldfarb's objections also alleged that Elaine Tash failed to transfer sufficient property to the survivors Trust to meet the marital tax exemption, and some of the $600,000 she gave to the beneficiaries should have been in the Survivor's Trust.   Because the Elaine Tash estate intended to file a cross-complaint against beneficiaries who received any part of the $600,000 paid by Elaine Tash as Trustee when she terminated the Decedents Trust, Probate Court was not the proper court in which resolve the dispute.   The Elaine Tash estate also intended to pursue equitable relief against beneficiaries, and the beneficiaries' failure to bring their claims during the lifetime of Elaine Tash prevented her from testifying to defend her decisions regarding Trust management, distribution of money to the Tash children, and transfers that created the Decedents and Survivors Trusts.   By taking the $600,000 given to them from the Decedents Trust without objection and without taking any action during Elaine Tash's lifetime, the beneficiaries left the administrator of the estate of Elaine Tash without a crucial witness.   Goldfarb thus alleged that estoppel, laches, and other equitable defenses should bar the claims in the beneficiaries' petition.   Finally, Goldfarb alleged that the Probate Court was not a court of equity and was not the proper court to resolve the parties' claims.

Trial of the petition occurred in June, July, and September 2008, and the matter was submitted on September 9, 2008.   The trial court's judgment filed on June 22, 2009, made the following findings.   Elaine Tash violated her fiduciary duty to beneficiaries of the Tash Family Trust and is subject to surcharge.   There was no transmutation of separate property when the first settlor's property was placed in the trust.   There was a pro tanto community property interest of 80 percent, and a separate property interest of 20 percent, in the business property.   The trial court determined the amount of money remaining in the decedent's trust to be $645,432.92, which amount was to be surcharged to Elaine Tash. The beneficiaries were entitled to interest on the surcharge from the date of death of Elaine Tash on February 2, 2006.   The Trust and the estate of Elaine Frances Tash were totally entwined within each other.

The judgment ordered a surcharge of $645,432.92 plus 10 percent interest from the date of Elaine Tash's death, should be paid from the Elaine Tash estate.

Goldfarb filed a timely notice of appeal from the judgment.

ISSUES

It is difficult to discern appellant's arguments on appeal because appellant's opening brief and reply brief do not clearly articulate any legal theories and do not contain reasoned analysis of any arguments.   This appeal appears to present two issues:

1. Whether the beneficiaries properly brought a petition pursuant to section 850 against the estate of Elaine Frances Tash;  and

2. Whether statutes of limitations barred the section 850 petition as untimely.

DISCUSSION

1. The Beneficiaries Properly Brought a Section 850 Petition Against the Estate

Goldfarb claims that by filing a petition pursuant to section 850, the beneficiaries did not comply with trust law, as interpreted by Arluk Medical Center Industrial Group, Inc. v. Dobler (2004) 116 Cal.App.4th 1324 (Arluk ), and their section 850 petition should have been denied.   In language Goldfarb relies on, Arluk states:  “Once a claim is filed in the probate proceeding, the estate has the option of paying or rejecting the claim.   If the claim is rejected, either affirmatively or by the estate's failure to act on it within 30 days after it is filed (§ 9256), the claim is considered ‘disputed’ (§ 11460, subd. (b));  and the claimant, to preserve its right to proceed against the decedent, must file a timely lawsuit against the estate. (§ 9353, subd.(a).)”  (Arluk, at p. 1334, fns. omitted.)

a. The Trial Court Had Jurisdiction over the Estate of Elaine Frances Tash

The petition in the instant appeal was an action against the estate of Elaine Tash, into which, it alleged, Trust assets had been wrongfully transferred.   The petition named, among other parties, Goldfarb as personal representative of the probate estate of Elaine Tash. By making a general appearance in the petition proceeding and participating in the action in a manner that recognized the court's jurisdiction, the estate of Elaine Frances Tash submitted to the court's jurisdiction.  (State Farm General Ins. Co. v. JT's Frames, Inc. (2010) 181 Cal.App.4th 429, 441.)   The judgment was an order that a surcharge of $645,432.92 plus interest was to be paid from the estate of Elaine Tash. The trial court had jurisdiction over the estate of Elaine Tash in this section 850 petition.

b. A Petition Pursuant to Section 850 Is an “Action” and Was Properly Brought

Against the Estate of Elaine Tash

Goldfarb contends that only the filing of a complaint can be used to obtain a judgment against a decedent's estate, that the beneficiaries have never filed a complaint, and that filing a petition is not the equivalent of filing a complaint.   Goldfarb again relies on section 9353, subdivision (a), which states that “a claim rejected in whole or in part is barred as to the part rejected unless, within the following times, the creditor commences an action on the claim․”  (Italics added.)   Goldfarb cites Code of Civil Procedure section 411.10:  “[a] civil action is commenced by filing a complaint with the court.”

“An action is an ordinary proceeding in a court of justice by which one party prosecutes another for the declaration, enforcement, or protection of a right, the redress or prevention of a wrong, or the punishment of a public offense.”   (Code Civ. Proc., § 22.)

“[A]ny interested person” 2 may file a petition requesting that the court make an order “[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).)  The trustee or any interested person may file a petition requesting that the court make an order “[w]here the trustee has a claim to real or personal property, title to or possession of which is held by another.”  (Id. at subd. (a)(3)(B).)  Section 855 states:  “An action brought under this part may include claims, causes of action or matters that are normally raised in a civil action to the extent that the matters are related factually to the subject matter of a petition filed under this part.”  (Italics added.)

Moreover, section 17200.1 provides additional authority for the beneficiaries' filing of a section 850 petition.   Section 17200.1 states:  “All proceedings concerning the transfer of property of the trust shall be conducted pursuant to the provisions of Part 19 (commencing with Section 850) of Division 2.” “Pursuant to section 17200.1, a trustee or interested person must file a section 850 petition when the ‘proceedings concern[ ] the transfer of property.’  “ (Mota v. Superior Court (2007) 156 Cal.App.4th 351, 356.)   Thus the beneficiaries were required to file a section 850 petition with regard to property transferred from the trust.   The beneficiaries' petition was an “action” for purposes of section 9353, subdivision (a).

2. Goldfarb Has Not Shown That the Petition Was Untimely Filed

a. Goldfarb Has Waived The Claim That the Statute of Limitations in Code of

Civil Procedure Section 366.2 Bars The Petition

Goldfarb claims that Code of Civil Procedure section 366.2 3 controls the beneficiaries' claims.   We reject this claim for two reasons.

First, the defense of the statute of limitations “ ‘must be affirmatively invoked in the lower court by appropriate pleading (if the defense appears on the face of the complaint, it must be raised by demurrer;  otherwise it must be specially pleaded in the answer) or is waived [citations].’  “ (Neptune Society Corp. v. Longanecker (1987) 194 Cal.App.3d 1233, 1243.)   Goldfarb's objection to the petition did not raise the statute of limitations defense based on Code of Civil Procedure section 366.2;  it is therefore waived.

Second, appellant's opening brief quotes Code of Civil Procedure section 366.2, but provides no further argument, legal authority, discussion or analysis of the statute of limitations defense and its applicability to this case.   For that additional reason the claim of error is forfeited on appeal.   (Berger v. California Ins. Guarantee Assn. (2005) 128 Cal.App.4th 989, 1007;  Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785.)

b. Goldfarb Has Not Shown That the Petition Was Untimely Filed in Violation of

Section 9353, Subdivision (a)(1)

Goldfarb claims that the beneficiaries did not comply with estate law, in that they did not file an action on the creditors' claims rejected by Goldfarb within 90 days required by section 9353, subdivision (a)(1).4

As we have already stated, Goldfarb's objection to the petition did not raise these statute of limitations defenses, which are therefore waived.

Moreover, after Goldfarb rejected the creditors' claims on July 5, 2007, the beneficiaries timely filed their petition on September 27, 2007, within the 90-day period of section 9353, subdivision (a)(1).

Goldfarb has not established error.   The petition was timely filed.

DISPOSITION

The judgment is affirmed.   Costs on appeal are awarded to Richard Tash, Lawrence Tash, and Brian Tash.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

We concur:

FOOTNOTES

FN1. Unless otherwise specified, statutes in this opinion will refer to the Probate Code..  FN1. Unless otherwise specified, statutes in this opinion will refer to the Probate Code.

FN2. An “interested person” includes a “creditor, beneficiary, and any other person having a property right in or claim against a trust estate or the estate of a decedent which may be affected by the proceeding.” (§ 48, subd. (a)(1).).  FN2. An “interested person” includes a “creditor, beneficiary, and any other person having a property right in or claim against a trust estate or the estate of a decedent which may be affected by the proceeding.” (§ 48, subd. (a)(1).)

FN3. Code of Civil Procedure section 366.2 states, in relevant part:  “(a) If a person against whom an action may be brought on a liability of the person, whether arising in contract, tort, or otherwise, and whether accrued or not accrued, dies before the expiration of the applicable limitations period, and the cause of action survives, an action may be commenced within one year after the date of death, and the limitations period that would have been applicable does not apply.“(b) The limitations period provided in this section for commencement of an action shall not be tolled or extended for any reason except as provided in any of the following, where applicable:“(1) Sections 12, 12a, and 12b of this code.“(2) Part 4 (commencing with Section 9000) of Division 7 of the Probate Code (creditor claims in administration of estates of decedents).“(3) Part 8 (commencing with Section 19000) of Division 9 of the Probate Code (payment of claims, debts, and expenses from revocable trust of deceased settlor).“(4) Former Part 3 (commencing with Section 21300) of Division 11 of the Probate Code (no contest clauses), as that part read prior to its repeal by Chapter 174 of the Statutes of 2008.”.  FN3. Code of Civil Procedure section 366.2 states, in relevant part:  “(a) If a person against whom an action may be brought on a liability of the person, whether arising in contract, tort, or otherwise, and whether accrued or not accrued, dies before the expiration of the applicable limitations period, and the cause of action survives, an action may be commenced within one year after the date of death, and the limitations period that would have been applicable does not apply.“(b) The limitations period provided in this section for commencement of an action shall not be tolled or extended for any reason except as provided in any of the following, where applicable:“(1) Sections 12, 12a, and 12b of this code.“(2) Part 4 (commencing with Section 9000) of Division 7 of the Probate Code (creditor claims in administration of estates of decedents).“(3) Part 8 (commencing with Section 19000) of Division 9 of the Probate Code (payment of claims, debts, and expenses from revocable trust of deceased settlor).“(4) Former Part 3 (commencing with Section 21300) of Division 11 of the Probate Code (no contest clauses), as that part read prior to its repeal by Chapter 174 of the Statutes of 2008.”

FN4. Section 9353, subdivision (a) states that “a claim rejected in whole or in part is barred as to the part rejected unless, within the following times, the creditor commences an action on the claim or the matter is referred to a referee or to arbitration:“(1) If the claim is due at the time the notice of rejection is given, 90 days after the notice is given.“(2) If the claim is not due at the time the notice of rejection is given, 90 days after the claim becomes due.”.  FN4. Section 9353, subdivision (a) states that “a claim rejected in whole or in part is barred as to the part rejected unless, within the following times, the creditor commences an action on the claim or the matter is referred to a referee or to arbitration:“(1) If the claim is due at the time the notice of rejection is given, 90 days after the notice is given.“(2) If the claim is not due at the time the notice of rejection is given, 90 days after the claim becomes due.”

CROSKEY, Acting P. J. ALDRICH, J.