Law and Motion Calendar Department Nine (10:00 a.m.) February 2, 2018

Transcription

1 1. MASTERS v. REAM PC Defendants Yang s, Klotz s and Jean Klotz, a Professional Corp. s Demurrer to 2 nd Amended Complaint. Plaintiffs, as individuals and successors in interest to Lewis Grauss, filed an action against defendants Yang, Klotz, Jean Klotz a Professional Corp., and others. The 2 nd Amended Complaint asserts to following causes of action against defendants Yang, Klotz and Jean Klotz a Professional Corp.: financial elder abuse; professional negligence (Legal Malpractice); conversion; and breach of fiduciary duty/trust. Defendants Yang, Klotz and Jean Klotz a Professional Corp. demur to all causes of action pled against them Plaintiffs oppose the demurrers on various grounds and submitted objections to all of defendants requests for judicial notice in support of the demurrers. Defendants Yang, Klotz and Jean Klotz a Professional Corp. replied to the opposition. Objections to Defendants Requests for Judicial Notice The objections to defendants requests for judicial notice numbers 1-3, 5, and 6 are sustained. The objections to defendants request for judicial notice number 4 are overruled. That document is plaintiff Dale Masters request to dismiss without prejudice the petition to appoint conservatorship of the person and estate of Mr. Grauss, which includes the court order entered on May 12, 2014 that dismissed the case without prejudice. A court may take judicial notice of the truth of facts asserted in documents such as orders, findings of fact and conclusions of law, and judgments. (Magnolia Square Homeowners Assn. v. Safeco Ins. Co. (1990) 221 Cal.App.3d 1049, 1056.) The court takes judicial notice that the conservatorship proceeding, 1

2 Conservatorship of Grauss, Case Number PP , was voluntarily dismissed without prejudice on May 14, The objections to defendants request for judicial notice number 7 are overruled. That document is the court s final order in Matter of the Lewis W. Grauss Family Trust, dated January 20, 2014, case number PP , which ordered the revocation of the durable power of attorney executed by Mr. Grauss on October 30, 2013, determined that all actions taken under that Power of Attorney are void, and determined that the Lewis W. Grauss Family Trust, dated January 20, 2014 executed by respondent Dale Masters under the Power of Attorney was also void. A court may take judicial notice of the truth of facts asserted in documents such as orders, findings of fact and conclusions of law, and judgments. (Magnolia Square Homeowners Assn. v. Safeco Ins. Co. (1990) 221 Cal.App.3d 1049, 1056.) The court takes judicial notice of the order. 1 st Cause of Action Financial Elder Abuse "Financial abuse" of an elder or dependent adult occurs when a person or entity does any of the following : (1) Takes, secretes, appropriates, or retains real or personal property of an elder or dependent adult to a wrongful use or with intent to defraud, or both. (2) Assists in taking, secreting, appropriating, or retaining real or personal property of an elder or dependent adult to a wrongful use or with intent to defraud, or both. (3) Takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or dependent adult by undue influence, as defined in Section 1575 of the Civil Code. (Welfare and Institutions Code, (a).) A person or entity shall be deemed to have taken, secreted, appropriated, obtained, or retained property for a wrongful use if, among other things, the person or entity takes, secretes, appropriates, obtains, or retains the property and the person or entity knew or should 2

3 have known that this conduct is likely to be harmful to the elder or dependent adult. (Welfare and Institutions Code, (b).) For purposes of this section, a person or entity takes, secretes, appropriates, obtains, or retains real or personal property when an elder or dependent adult is deprived of any property right, including by means of an agreement, donative transfer, or testamentary bequest, regardless of whether the property is held directly or by a representative of an elder or dependent adult. (Welfare and Institutions Code, (c).) - Alleged Aiding and Abetting Financial Elder Abuse by Defendant Ream Plaintiffs allege that defendants Yang, Klotz, and Jean Klotz a Professional Corp. (Defendant Lawyers) aided and abetted (assisted) defendant Ream in taking real or personal property of the elder settlor, Lewis Grauss, by undue influence or with intent to defraud. (2 nd Amended Complaint, paragraphs ) The defendant lawyers argue that the performance of professional services by itself does not violate the elder abuse statute even where those services were used by a third party to wrongfully obtain an elder s assets, the professional is liable only if the professional knew the third party s conduct was wrongful, and conclusory allegations that the defendant knew or should have known of the wrongful conduct are insufficient and without factual support. In addition, contrary to plaintiffs assertion that the defendant lawyers conceded the elder abuse cause of action element that property was taken from the elder by defendant Ream, the defendant lawyers drew the court s attention to the fact that plaintiffs have not alleged anywhere in the 2 nd amended complaint that defendant Ream took any trustee fees during Lewis Grauss lifetime or after his death. (Defendants Memorandum of Points and Authorities in Support of Demurrer, page 4, lines 1-2.) 3

4 In order for the lawyer defendants to be held liable for aiding/abetting/assisting defendant Ream s alleged wrongful taking of Mr. Grauss property, there must be sufficient allegations that he took property. Plaintiffs allege that defendant Ream arranged to take, secrete, obtain and/or or appropriate Mr. Grauss property, including, but not limited to allegedly exorbitant management fees pursuant to the terms of the 2015 Separate Property Trust and January 2015 Amendment, as well as other property, and retaining the property for himself by using undue influence and/or with the intent to defraud; and defendants took property belonging to the elder settlor by means of an agreement, donative transfer, or testamentary bequest. (2 nd Amended Complaint paragraph 71 and 76.) The allegations of taking are contentions, deductions, and conclusions of law and fact that the court need not take as true for the purposes of this demurrer (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4 th 726, ), therefore plaintiffs must allege sufficient facts to establish that defendant Ream took property. The only allegations of fact concerning takings of property involve the alleged improper transfer of the alleged community property annuities to the 2015 Separate Property Trust by the settlor, rather than transferring them to the Decedent s Trust and the provision of the 2015 Separate Property Trust that trustee Ream was entitled to receive an annual fee of 6% of the value of the Trust assets amounted to a taking, because the fees are excessive. (2 nd Amended Complaint, paragraphs 41, 45, and 71.) The 2015 Separate Property Trust provides: all of the net income from the assets of the Trust estate shall be paid to the elder settlor or applied for the benefit of the settlor during his life; distributions of principal to the settlor can be made in the trustee s discretion; and during the settlor s lifetime, the trustee shall distribute such amounts from the principal of the Trust, up 4

5 to the whole amount, as the settlor may from time to time request of the trustee in writing. (2 nd Amended Complaint, Exhibit C 2015 Separate Property Trust, paragraphs ) The Decedent s Trust has similar provisions, except there is a limitation on amount the surviving settlor may demand to be paid from the principal of the Trust. (2 nd Amended Complaint, Exhibit A 1998 Declaration of Trust, paragraphs VI.B.1-3.) The allegations of the 2 nd amended complaint and the exhibits attached thereto do not sufficiently allege that the annuities were taken by defendant Ream in that the net income and principal from the annuities were available to the elder surviving settlor whether they were transferred to the Decedent s Trust or the Separate Trust. As for the 6% annual trustee fee, there does not appear to be any allegations of fact that the trustee fee was ever paid to defendant Ream during Mr. Grauss lifetime. The allegations of fact are insufficient to allege defendant Ream took any property from the elder settlor. The court further finds that the allegations of fact are insufficient to establish that the defendant lawyers are liable for financial elder abuse by allegedly aiding/abetting/assisting defendant Ream in taking property of the elder settlor. An appellate court has held that the elder abuse statutes do not impose strict liability for assisting in the wrongful taking of the property of an elder by a third party and such actions require proof that the party knew of the third party's wrongful conduct and it must be alleged that the party who purportedly assisted in the taking had actual knowledge of the underlying wrong the party purportedly aided and abetted. The appellate court stated: In our view, the provision cannot be understood to impose strict liability for assistance in an act of financial abuse. Generally, California has adopted the common law rule for subjecting a defendant to liability for aiding and abetting a tort. Liability may... be imposed on one who aids and abets 5

6 the commission of an intentional tort if the person (a) knows the other's conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person's own conduct, separately considered, constitutes a breach of duty to the third person. [Citations.] (Casey, supra, 127 Cal.App.4th at p. 1144, 26 Cal.Rptr.3d 401, quoting Fiol v. Doellstedt (1996) 50 Cal.App.4th 1318, , 58 Cal.Rptr.2d 308.) The adoption of this rule predates the elder abuse statutes. (See Coffman v. Kennedy (1977) 74 Cal.App.3d 28, 31 32, 141 Cal.Rptr. 267.) As the Legislature is presumed to be aware of existing judicial decisions when it enacts or amends statutes, the term assists, as found in former section , subdivision (a)(2), is properly interpreted in light of the rule. (Bradley v. Breen (1999) 73 Cal.App.4th 798, 804, 86 Cal.Rptr.2d 726.) Under that rule, a bank may be liable as an aider and abettor of a tort if the bank, in providing ordinary services, actually knew those transactions were assisting the customer in committing a specific tort. (Casey, supra, 127 Cal.App.4th at p. 1145, 26 Cal.Rptr.3d 401.) We thus conclude that when, as here, a bank provides ordinary services that effectuate financial abuse by a third party, the bank may be found to have assisted the financial abuse only if it knew of the third party's wrongful conduct. [FN 11] FN 11. We find additional support for this conclusion in Wood v. Jamison (2008) 167 Cal.App.4th 156, 83 Cal.Rptr.3d 877. There, an attorney represented an elderly client and a third party posing as the elderly client's nephew in a series of transactions that enriched the third party at the expense of the elderly client. (Id. at pp , 83 Cal.Rptr.3d 877.) Following a trial, a judgment was entered against the attorney that included a fee award under section (Id. at pp , 83 Cal.Rptr.3d 877.) On appeal, the attorney contended that the fee award was improper because there was no evidence that he had knowingly assisted the third party's financial abuse. (Ibid.) In affirming the judgment, the appellate court 6

7 concluded there was sufficient evidence that the attorney knew that the third party was taking the elder's funds for an improper purpose. (Ibid.) Because appellant has not alleged that respondent knew about the schemes that victimized her father, she has failed to allege that respondent assisted in financial abuse under section As explained in Casey, on demurrer, a court must carefully scrutinize whether the plaintiff has alleged the bank had actual knowledge of the underlying wrong it purportedly aided and abetted. (Casey, supra, 127 Cal.App.4th at p. 1152, 26 Cal.Rptr.3d 401.) In sum, the demurrers to her complaints were properly sustained. (Das v. Bank of America, N.A. (2010) 186 Cal.App.4th 727, ) Plaintiffs argue in opposition that the following are sufficient factual allegations to support plaintiffs contention that defendant Yang aided and abetted defendant Ream to take the property of the elder settlor: defendant Yang knew about Mr. Grauss mental state, his difficulties with basic financial information, his susceptibility to undue influence, poor short term memory and cognitive deficits; the 2015 trust instruments were drafted at defendant Ream s direction and defendant Yang assisted defendant Ream in obtaining Mr. Grauss property in the form of large annual trustee fees of 6% of the value of the 2015 Separate Property Trust estate; defendant Ream had extensive dealings with defendant Yang and Mr. Grauss during the relevant time period; by delaying distribution of trust assets of the 2015 Separate Property Trust for 15 years defendant Yang assisted in subverting Mr. Grauss true intentions to enrich herself and defendant Ream through trustee fees to defendant Ream and legal fees to herself; that the 2015 Trust instruments made defendant Ream the de facto beneficiary of the Trust when defendant Yang should have known that the elder settlor intended that the property be distributed to plaintiffs Dale Masters and her family; defendant Yang knew Mr. Grauss had named plaintiffs Amber Cobb and Victoria Masters as beneficiaries of the annuities that Mr. Grauss had transferred to the 2015 Separate Property Trust; the annual 6% fee assessed 7

8 against the value of those annuities over 15 years will leave little, if anything from the annuities to distribute to beneficiaries Amber Cobb and Victoria Masters; and defendant Yang knew or should have known that settlor Grauss lacked capacity and/or was unduly influenced and did not appreciate the effect of the Trust instruments defendant Yang drafted and Mr. Grauss executed. (2 nd Amended Complaint, paragraphs 22, 31-34, 36, 39, 40-48, and ) Shorn of the contentions, deductions, and conclusions of law and fact that the court need not take as true for the purposes of this demurrer (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4 th 726, ), the factual allegations boil down to the following: defendant Yang knew about elder settlor Grauss mental deficiencies and susceptibility to undue influence; she drafted Trust instruments that provided for a 6% annual trustee fee and delayed the distribution of the Trust assets to the grandchildren beneficiaries until 2030; Mr. Grauss executed documents transferring his annuities to the 2015 Separate Property Trust when they were community property and should have been transferred to the decedent s trust after the death of his spouse; and defendant Yang had extensive dealings with defendant Yang and Mr. Grauss during the relevant time period. These allegations taken as true for the purposes of demurrer are insufficient to establish that defendant Yang had actual knowledge of any wrongful scheme of defendant Ream to take Mr. Grauss property. There are no allegations that the annual fee was excessive for administration of the Trusts in light of the size of the estate and the trustee having to deal with the dynamics of the relationships of the beneficiaries and former beneficiaries with the settlor, who recently prevailed against plaintiff Dale Masters in litigation of two probate cases. Furthermore, the annual fee of 6% does not lead to exhaustion of the Trust estate over 15 years as concluded by the plaintiffs. The Trust estate presumably will be invested in light of the fiduciary duty of trustees to make the assets productive, thereby reducing the impact of a 6% 8

9 fee over a 15 year period depending on the net income from the assets. In addition, a 15 year delay in distribution to grandchildren is not all that unusual. - Sufficiency of Allegations of Defendant Lawyers Taking, Secreting, Appropriating, Obtaining, or Retaining of the Elder s Property Injury/harm to the elder is relevant to financial elder abuse actions. Taking, secreting, appropriating, obtaining, or retaining the elder s property for wrongful use occurs where the property is taken and the person or entity knew or should have known that this conduct is likely to be harmful to the elder or dependent adult. (Welfare and Institutions Code, (b).) Plaintiffs assert various allegations that the defendant attorneys independently engaged in financial elder abuse by charging excessive, exorbitant fees for legal services provided on behalf of settlor Lewis Grauss, such as when she successfully defended against conservatorship proceedings instituted by plaintiff Dale Masters that resulted in a voluntary dismissal and when she successfully prosecuted a petition on behalf of Mr. Grauss that resulted in a court order after a hearing that revoked a durable power of attorney (POA) that named Dale Masters as attorney-in-fact, determined that Dale Master s conduct under the POA was void, and determined that the Lewis Grauss Family Trust executed by Dale Masters under the POA was void. Plaintiffs also alleged the fees were excessive and exorbitant as a result of the following conduct: defendant Yang inflated the time spent on routine tasks; defendant Yang charged her regular hourly rate to take the settlor to lunch; and defendant Yang visited her client numerous times while Mr. Grauss residing in an Eskaton facility. (2 nd Amended Complaint, paragraphs 27, 29, 32, 64, and 73; and Defendants Request for Judicial Notice (RJN) 7.) 9

10 Allegations that the attorney fees were unnecessary, exorbitant, unconscionable, and inflated for routine tasks are merely conclusions of fact or law. In ruling on demurrers, the court need not treat as true contentions, deductions or conclusions of fact or law. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4 th 726, ) The facts alleged in support of the conclusion that the fees were unnecessary, exorbitant, unconscionable, and inflated lack the specificity required to lead to the those conclusions. Attorneys are not mandated to charge less than their normal fees to meet clients for lunch and charging the regular hourly fee does not support the conclusion that the fees were unnecessary, exorbitant, and unconscionable. Meeting with clients at a care facility where they reside is normal, unless plaintiffs allege specific facts to establish the frequency of visits was abnormal, particularly since defendant Yang represented Mr. Grauss in two probate cases during the time periods that are relevant to this case, the conservatorship case and Lewis W. Grauss Family Trust, Case Number PP There are no specific facts that the court can find that allege the amount of the fees charged that were allegedly inflated and what the routine tasks they were charged for. The 2 nd amended complaint fails to allege sufficient facts to establish the defendant attorneys took, secreted, appropriated, or retained real or personal property of an elder by charging fees for legal services rendered to that elder. In summary, the demurrer to the elder abuse cause of action is sustained. The question becomes whether further leave to amend should be granted. Plaintiffs have had three opportunities to sufficiently allege an elder abuse cause of action against the defendant lawyers and failed. There does not appear to be a reasonable possibility that the pleading can be cured by amendment, the 2 nd amended complaint appears to be incapable of amendment to cure the defect, and plaintiff has not demonstrated how the 2 nd 10

11 amended complaint can be amended to cure the defect. (See Roman v. County of Los Angeles (2000) 85 Cal.App.4th 316, 322.) The demurrer to the elder abuse cause of action is sustained without leave to amend. 3 rd Cause of Action Professional Negligence (Legal Malpractice) Plaintiffs expressly allege the sole reason they have standing to maintain an action against defendants for legal malpractice while defendant lawyers were acting as Lewis Grauss attorney is that they are the intended express beneficiaries of Lewis Grauss estate as identified in the various trust documents at issue; and disinherited plaintiffs Masters are express beneficiaries in the superseded 1998 Trust instrument and will become beneficiaries should the 2015 Trust instrument be invalidated. (2 nd Amended Complaint, paragraph 88.) The elements of a cause of action for attorney malpractice are: (1) the duty to use such skill, prudence, and diligence as other attorneys commonly possess and exercise; (2) a breach of the duty; (3) a proximate causal connection between the negligent conduct and the resulting injury; and (4) actual loss or damage resulting from the attorney's negligence. (Budd v. Nixen (1971) 6 Cal.3d 195, 200, 98 Cal.Rptr. 849, 491 P.2d 433.) The Court of Appeal has noted: [A]n attorney's duty to his or her client depends on the existence of an attorney-client relationship. If that relationship does not exist, the fiduciary duty to a client does not arise. [Citation.] Except for those situations where an attorney is appointed by the court, the attorneyclient relationship is created by some form of contract, express or implied, formal or informal. [Citations.] (Fox v. Pollack (1986) 181 Cal.App.3d 954, 959, 226 Cal.Rptr. 532.) (Daniels v. DeSimone (1993) 13 Cal.App.4th 600, 607.) However, under certain limited circumstances, the express beneficiaries of an estate or trust may have standing to bring an action for legal malpractice against the decedent s estate planning attorney. 11

12 Generally, an attorney owes a duty of care, and is thus answerable in malpractice, only to the client with whom the attorney stands in privity of contract. (Osornio, supra, 124 Cal.App.4th at p. 320, 21 Cal.Rptr.3d 246.) However, courts have extended an attorney's duty of care to nonclients including will and trust beneficiaries in limited circumstances. (Lucas v. Hamm (1961) 56 Cal.2d 583, 15 Cal.Rptr. 821, 364 P.2d 685 (Lucas) [permitting malpractice suit by will beneficiaries against attorney whose negligent preparation of a will caused them to lose their testamentary rights]; Bucquet v. Livingston (1976) 57 Cal.App.3d 914, 129 Cal.Rptr. 514 (Bucquet) [permitting malpractice suit by trust beneficiaries who lost portion of testamentary rights because of attorney's negligence].) In Heyer v. Flaig (1969) 70 Cal.2d 223, 228, 74 Cal.Rptr. 225, 449 P.2d 161, disapproved on other grounds in Laird v. Blacker (1992) 2 Cal.4th 606, 617, 7 Cal.Rptr.2d 550, 828 P.2d 691, the Supreme Court explained the rationale for extending tort liability to an intended beneficiary as follows: When an attorney undertakes to fulfill the testamentary instructions of his client, he realistically and in fact assumes a relationship not only with the client but also with the client's intended beneficiaries. The attorney's actions and omissions will affect the success of the client's testamentary scheme; and thus the possibility of thwarting the testator's wishes immediately becomes foreseeable. Equally foreseeable is the possibility of injury to an intended beneficiary. In some ways, the beneficiary's interests loom greater than those of the client. After the latter's death, a failure in his testamentary scheme works no practical effect except to deprive his intended beneficiaries of the intended bequests... only the beneficiaries suffer the real loss. (Heyer v. Flaig, supra, at p. 228, 74 Cal.Rptr. 225, 449 P.2d 161.) Attorney [l]iability to testamentary beneficiaries not in privity is not, however, automatic. (Bucquet, supra, 57 Cal.App.3d at p. 921, 129 Cal.Rptr. 514.) Whether an attorney owes a duty to a nonclient beneficiary is a matter of policy and involves the balancing of various factors. (Lucas, supra, 56 Cal.2d at p. 12

13 588, 15 Cal.Rptr. 821, 364 P.2d 685.) Those factors the so-called Biakanja /Lucas [Footnote omitted.] factors are: [1] the extent to which the transaction was intended to affect the plaintiff [beneficiary], [2] the foreseeability of harm to him, [3] the degree of certainty that the plaintiff suffered injury, [4] the closeness of the connection between the defendant's [attorney's] conduct and the injury[,]... [5] the policy of preventing future harm[,]... and [6] whether the recognition of liability... would impose an undue burden on the profession. (Osornio, supra, 124 Cal.App.4th at p. 330, 21 Cal.Rptr.3d 246.) (Emphasis added.) (Paul v. Patton (2015) 235 Cal.App.4th 1088, ) First, plaintiffs John and Dale Masters are expressly disinherited in paragraph 7.5 of the 2015 Amendment to the Survivor s Trust and paragraph 7.6 of the Separate Property Trust. Those trust instruments are attached as Exhibits B and C of the 2 nd Amended Complaint. Therefore, the court need not take as true for the purposes of this demurrer that plaintiffs John and Dale Masters are the intended express beneficiaries of Lewis Grauss estate as identified in the various trust documents at issue. The courts, however, will not close their eyes to situations where a complaint contains allegations of fact inconsistent with attached documents, or allegations contrary to facts which are judicially noticed. (Alphonzo E. Bell Corp. v. Bell View Oil Syndicate (1941) 46 Cal.App.2d 684 [116 P.2d 786]; Chavez v. Times-Mirror Co. (1921) 185 Cal. 20 [195 P. 666].) Thus, a pleading valid on its face may nevertheless be subject to demurrer when matters judicially noticed by the court render the complaint meritless. (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604.) However, plaintiffs John Masters and Dale Masters claim they are expressly named beneficiaries with standing to maintain a legal malpractice action, because they were beneficiaries of the superseded provisions of the 1998 Trust instrument and the 2015 Trust instruments are invalid. 13

14 Plaintiffs allege: in November 2013 Dr. Ang, a doctor familiar with geriatric care, examined the settlor, found he was mentally impaired, and certified that the settlor did not understand the nature and extent of his estate, lacked the ability to consent to transfer of property or other financial transactions, or to manage his estate in any way; six weeks after executing the January 2015 Trust instruments drafted by the defendant lawyers the settlor testified during a deposition in a State Bar Court proceeding that he believed that the 1998 Trust instrument was the only trust he had or needed and exhibited confusion and/or mistaken memory in his testimony; based on these facts and others, plaintiffs are informed and believe that the settlor did not intend to change the 1998 Trust, he did not understand or appreciate the terms or effects of the 2015 Trust instruments, and he did not understand he was disinheriting his beneficiaries, defendants Masters; that the extensive dealings with defendant Yang and defendant Ream and the other facts previously alleged leads plaintiffs to believe that defendant Yang prepared the January 2015 amendment at defendant Ream s urging and the defendants exerted undue influence on the settlor to execute the 2015 Trust instruments; and defendant Yang breached her duties to the settlor and plaintiffs in that she failed to accomplish the settlor s testamentary intentions by failing to draft the terms of the 2015 Trust instruments so as not to disinherit the Masters and not completely deplete the Trust assets by charging annual 6% trustee fees on a Trust that does not distribute to the beneficiaries until 2030; the settlor did not intend to distribute the estate in an manner that would not occur in 15 years and that would leave the Trust assets being completely depleted by administrative fees of 6% annually, because defendants discovery responses indicate that they did not discuss the financial consequences with the settlor and in plaintiffs dealings with the settlor he never indicated that he wanted defendant Ream to receive all or most of his estate, but he did state he wanted his estate to go to plaintiff Dale Masters and her family; and throughout the settlor s 14

15 life he consistently expressed love for plaintiffs Dale Masters, Amber Cobb and Victoria Masters, and affection for plaintiff John Masters. (2 nd Amended Complaint, paragraphs 28, 33, 34, 36, 44, 45, 46, 61, and 93.) Absent allegations of fact establishing that the will or trust was not drafted in accordance with the testator s/trustor s intent or estate plan, the testator s/trustor s attorney owes no duty to disappointed heirs and/or potential beneficiaries to advocate or urge an alternative estate plan. Under the rule announced in Moore v. Anderson Zeigler Disharoon Gallagher & Gray, supra, 109 Cal.App.4th at page 1298, 135 Cal.Rptr.2d 888, Clark's sole duty was to Farris, and he did not owe a duty to Farris's beneficiaries to evaluate or ascertain his client's capacity to make a new will. As Moore explains, a lawyer who is persuaded of the client's testamentary capacity by his... own observations and experience, and who drafts the will accordingly, fulfills that duty of loyalty to the testator, [and he] should not be required to consider the effect of the new will on beneficiaries under a former will or beneficiaries of the new will. (Id. at p. 1299, 135 Cal.Rptr.2d 888.) [Footnote omitted.] We add to this our own observation that a lawyer who is persuaded of his client's intent to dispose of her property in a certain manner, and who drafts the will accordingly, fulfills his duty of loyalty to his client and is not required to urge the testator to consider an alternative plan in order to forestall a claim by someone thereby excluded from the will (or included in the will but deprived of a specific asset bequeathed to someone else). As Moore also explains, a rule that extended a lawyer's duty to beneficiaries in this context would place an intolerable burden on the lawyer. Not only would the attorney be subject to potentially conflicting duties to the client and to potential beneficiaries, but counsel also could be subject to conflicting duties to different sets of beneficiaries, including those disinherited if the lawyer prepares a will or potential beneficiaries if the attorney refuses to prepare a new will in accordance with the testator's wishes. (Moore v. Anderson Zeigler Disharoon Gallagher & 15

16 Gray, supra, 109 Cal.App.4th at p. 1299, 135 Cal.Rptr.2d 888.) (Emphasis added.) (Boranian v. Clark (2004) 123 Cal.App.4th 1012, ) Where a doubt exists as to whether the plaintiff was the decedent's intended beneficiary, no duty exists. (Boranian v. Clark (2004) 123 Cal.App.4th 1012, 1018, 20 Cal.Rptr.3d 405 [ liability to a third party will not be imposed where there is a substantial question about whether the third party was in fact the decedent's intended beneficiary ]; Ventura County Humane Society v. Holloway (1974) 40 Cal.App.3d 897, 906, 115 Cal.Rptr. 464 [lawyer who drafted a will with a bequest to a nonexistent animal rights organization owed no duty to appellant animal rights organization where there was no allegation that the testator intended to leave a bequest to appellant].) (Paul v. Patton (2015) 235 Cal.App.4th 1088, 1097.) In short, the testator's intent to benefit the plaintiff is a prerequisite to the imposition of a duty on the attorney to the plaintiff. This makes sense, as the rationale for allowing testamentary instrument beneficiaries to recover in the event of a breach by the attorney is that the main purpose of the testator in making his agreement with the attorney is to benefit those beneficiaries and this intent can be effectuated... only by giving the beneficiaries a right of action. (Lucas, supra, 56 Cal.2d at p. 590, 15 Cal.Rptr. 821, 364 P.2d 685.) (Paul v. Patton (2015) 235 Cal.App.4th 1088, 1098.) Although the allegations are insufficient to establish intentional tortious conduct by defendant Yang related to purportedly assisting in defrauding an elder, the previously cited allegations of the 2 nd amended complaint sufficiently allege facts to support a claim that defendant Yang failed to draft and have executed the subject trust instruments as intended by Lewis Grauss and she neglected to discuss the financial considerations of the annual trustee set forth on the 2015 Separate Property Trust as drafted by defendant Yang leading to an 16

17 alleged loss of distribution of some of the Trust assets to the express beneficiaries plaintiffs Amber Cobb and Victoria Masters. The court need not and does not reach the issue of whether or not plaintiffs Masters have standing to maintain the professional malpractice cause of action as not being express beneficiaries of the subject 2015 Trust instruments. A demurrer does not lie to a portion of a cause of action. (Citations Omitted.) (PH II, Inc. v. Superior Court (1995) 33 Cal.App.4 th 1680, 1682.) Where a portion of the cause of action is defective on the face of the complaint, the appropriate remedy is to bring a motion to strike that portion of the complaint. (PH II, Inc., supra at pages ) The demurrer to the 3 rd cause of action for professional negligence is overruled. 4 th Cause of Action - Conversion The elements of a conversion cause of action are: (1) Plaintiff's ownership or right to possession of tangible property at the time of the conversion; (2) Defendant's conversion (wrongful taking or disposition); and (3) Damages. (5 Witkin, California Procedure (5 th ed. 2008) Pleading, 702(2), page 118.) When money is the subject of conversion, the plaintiff must plead that a specific identifiable sum was taken. (See Vu v. California Commerce Club (1997) 58 C.A.4th 229, 235, 68 C.R.2d 31; 5 Summary (10th), Torts, 703.) (5 Witkin, California Procedure (5 th ed ) Pleading, 702(3), page 118.) "To establish a conversion, plaintiff must establish an actual interference with his ownership or right of possession... Where plaintiff neither has title to the property alleged to have been converted, nor possession thereof, he cannot maintain an action for conversion." [Footnote omitted.] (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, , 176 Cal.Rptr. 824, emphasis added. See also General Motors A. Corp. v. Dallas 17

18 (1926) 198 Cal. 365, 370, 245 P. 184.) (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 136.) The defendant lawyers argue that the plaintiffs did not sufficiently allege facts establishing they owned or had a right to possession of tangible property/funds at the time of the alleged conversion; a mere contractual right to payment, without more will not suffice to establish the ownership or right to possession element of a conversion cause of action; and as beneficiaries of the revocable trust, the plaintiffs had no ownership or property rights to the property and only had, at best, an expectancy. Plaintiffs argue in opposition that the allegations of exertion of undue influence on the settlor to execute Trust instruments to deprive plaintiffs of property the settlor intended to leave the plaintiffs, transfer of funds that should have been distributed to Dale Master under the 1998 trust to the 2015 Separate Property Trust, and charging excessive fees to the settlor for legal services are sufficient to allege a conversion cause of action. The Third District Court of appeal has held: Neither legal title nor absolute ownership of the property is necessary. (Messerall v. Fulwider (1988) 199 Cal.App.3d 1324, 1329, 245 Cal.Rptr. 548.) A party need only allege it is entitled to immediate possession at the time of conversion. [Citations.] (Bastanchury v. Times Mirror Co. (1945) 68 Cal.App.2d 217, 236, 156 P.2d 488, italics in original.) However, a mere contractual right of payment, without more, will not suffice. For example, in Imperial Valley Co. v. Globe Grain and Milling Co. (1921) 187 Cal. 352, 202 P. 129, the tenant entered into an agreement to raise crops on leased land and to pay the landlord one-fourth of the crop as rental. However, the tenant sold the entire crop and the proceeds were used to pay other debts of the tenant. The landlord brought an action for conversion. The Supreme Court concluded no claim was stated because the rental agreement established no title to or lien upon the crop but only established the measure of damages for 18

19 breach of contract. (Id. at pp , 202 P. 129.) (Emphasis in original.) (Farmers Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 452.) A remainder interest is vested, subject to complete divestment, when the remainderman is in existence and ascertained and his interest is not subject to a condition precedent, although his right to possession or enjoyment on the expiration of the prior interests is subject to termination by reason, e.g., of a power of appointment. Stated another way, persons in existence, who are specifically designated in a trust instrument to take in default of the exercise of a power of appointment by the holder of the preceding estate, are beneficiaries of that trust and acquire vested remainder interests, although their interests are subject to complete divestment. (In re Estate of Murphy (1920) 182 Cal. 740, 743, 190 P. 46 [ The remainders thus created were vested although defeasible. ]; Otto v. Union Nat. Bank, supra, 38 Cal.2d at p. 239, 238 P.2d 961 [default beneficiaries received valid remainder interests]; Levy v. Crocker Citizens Nat. Bank (1971) 14 Cal.App.3d 102, 107, 94 Cal.Rptr. 1 [same]; see also 1 Simes, Law of Future Interests (1936) Vested and Contingent Remainders 80, p. 134 and cases cited.) This principal was codified in 1873 in Civil Code section 781 which specifically recognizes a future interest which is subject to being completely divested is nevertheless considered a valid vested interest in California. This section provides: A general or special power of appointment does not prevent the vesting of a future estate limited to take effect in case such power is not executed. (Ammco Ornamental Iron, Inc. v. Wing (1994) 26 Cal.App.4th 409, ) In other words, while the interests of remainder beneficiaries of Trusts are vested, they do not own or have an immediate right to possession of the Trust assets, because their vested interests arising from the Trust instrument are subject to complete divestment. 19

20 The court has previously determined in this ruling that the factual allegations are not sufficient to support plaintiffs conclusions of fact or law that the fees charged for legal services rendered to Mr. Grauss were exorbitant, unconscionable, and/or inflated. Therefore, those allegations are also insufficient to establish a critical element of a conversion cause of action that defendants wrongfully took such fees. Even assuming for the sake of argument only that the allegations were sufficient to establish Mr. Grauss was charged and paid exorbitant, unconscionable, and/or inflated fees, there is insufficient evidence to establish that plaintiffs owned or had a right to possess those funds at the time they were paid to the defendant lawyers. Defendant Yang allegedly charged Mr. Grauss exorbitant, unconscionable, and inflated fees for legal services performed during Mr. Grauss lifetime. (2 nd Amended Complaint, paragraphs 27, 64, and 73.) The plaintiffs did not own or have any right to immediately possess Mr. Grauss assets or the assets of his three Trusts while he was alive. Therefore, at the time the legal bills complained of were paid, plaintiffs had no ownership or possessory rights to those funds at the time they were allegedly converted. Plaintiffs also allege that the 2015 Trust amendments that created the issue related to their alleged rights to the property left to them under the provisions of the 1998 Trust were executed on January 21, 2015 and September 28, (2 nd Amended Complaint, paragraphs 34 and 36.) Settlor Lewis Grauss passed away on May 31, (2 nd Amended Complaint, paragraph 60.) Therefore, plaintiffs were not entitled to distribution under the terms of the 1998 Trust instrument until May 31, (See 2 nd Amended Complaint, Exhibit A 1998 Declaration of Trust, paragraphs VI.B.5 and VI.C.4. and Article VII.) The allegations of the complaint establish that the alleged conversion by means of the execution of the 2015 Trust instruments occurred at a time when plaintiffs did not own or have any right to possess the Trust assets. 20

21 The same holds true regarding Mr. Grauss transfer of his annuities to the 2015 Separate Property Trust. Plaintiff allege that the annuities were community property that should have been in the decedent s trust under the provisions of the 1998 Trust (See 2 nd Amended Complaint, paragraphs ) and argue that the transfer to the 2015 Separate Property Trust was a conversion of their property. The transfer occurred on September 28, 2015 by execution of the 2015 Separate Property Trust, which declared that the subject annuities were assets of that Trust estate. (2 nd Amended Complaint, paragraph 36; and Exhibit C Separate Property Trust, paragraph 2.1 and Exhibit D Schedule of Trust Assets.) The factual allegations of the 2 nd amended complaint establish that plaintiffs did not own and did not have a right to possession of the Trust assets, or the annuities, at the time of the transfer of the annuities. Furthermore, the court is unable to find any allegation that the annuities were ever declared to be held in the 1998 Trust such that the annuities would be subject to the provision of that Trust instrument for division of 1998 Trust assets into a survivor s trust and decedent s trust upon the death of deceased settlor Roberta Grauss on March 5, The annuities were transferred by Mr. Grauss to the 2015 Separate Property Trust by inclusion in Schedule of the Assets of the 2015 Separate Property Trust; and the only claim is that the annuities were community property that should have been in the decedent s trust under the provisions of the 1998 Trust. (See 2 nd Amended Complaint, paragraphs and Exhibit D.) The 1998 Trust instrument states that the Trust assets are listed in Schedule A of that instrument. There is no Schedule A attached to the 1998 Trust. Therefore, it would appear from the face of the 2 nd amended complaint and the Exhibits attached thereto that plaintiffs have no claim they had any expectancy of distribution of the annuities, let alone owned the annuities or had a right to possess them by virtue of the 1998 Trust provisions. 21

22 The demurrer to the conversion cause of action is sustained. The question becomes whether leave to amend should be granted. Plaintiffs have had three opportunities to sufficiently allege a conversion cause of action against the defendant lawyers and failed. There does not appear to be a reasonable possibility that the pleading can be cured by amendment, the 2 nd amended complaint appears to be incapable of amendment to cure the defect, and plaintiff has not demonstrated how the 2 nd amended complaint can be amended to cure the defect. (See Roman v. County of Los Angeles (2000) 85 Cal.App.4th 316, 322.) The demurrer to the conversion cause of action is sustained without leave to amend. 5 th Cause of Action Breach of Fiduciary Duty and/or Trust Plaintiffs Amber Cobb and Victoria Masters assert a cause of action against the defendant lawyers for breach of fiduciary duty or breach of trust. The allegations of fact asserted to support the breach of fiduciary duty cause of action are identical to the facts alleged to support the professional negligence cause of action asserted by plaintiffs Amber Cobb and Victoria Masters against the defendant lawyers. Appellate decisions have found that if a tort cause of action for insurance bad faith is based solely upon the facts which give rise to a related contract cause of action, no separately actionable tort claim is stated. If the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated. (Careau v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395; see also Congleton v. National Union Fire Ins. Co. (1987) 189 Cal.App.3d 51, 59.) 22

23 The same would appear to apply in an analogous situation where the same facts are alleged as the basis for asserting the torts of breach of fiduciary duty and professional negligence. Defendants demurrer on the ground that this cause of action merely duplicates the professional negligence cause of action is sustained. However, that does not end the court s inquiry related to the cause of action. Plaintiffs argue in opposition that they also assert that the defendant lawyers are liable for breach of trust and assisting defendant Ream to breach the Trust. If a trustee commits a breach of trust, or threatens to commit a breach of trust, a beneficiary or cotrustee of the trust may commence a proceeding for any of the following purposes that is appropriate: (1) To compel the trustee to perform the trustee's duties. (2) To enjoin the trustee from committing a breach of trust. (3) To compel the trustee to redress a breach of trust by payment of money or otherwise. (4) To appoint a receiver or temporary trustee to take possession of the trust property and administer the trust. (5) To remove the trustee. (6) Subject to Section 18100, to set aside acts of the trustee. (7) To reduce or deny compensation of the trustee. (8) Subject to Section 18100, to impose an equitable lien or a constructive trust on trust property. (9) Subject to Section 18100, to trace trust property that has been wrongfully disposed of and recover the property or its proceeds. (Probate Code, 16420(a).) The provision of remedies for breach of trust in subdivision (a) does not prevent resort to any other appropriate remedy provided by statute or the common law. (Probate Code, 16420(b).) A violation by the trustee of any duty that the trustee owes the beneficiary is a breach of trust. (Probate Code, ) 23

24 Plaintiffs allege the conclusion of law or fact that defendant Yang owed duties to plaintiffs as beneficiaries of the Trust, including duties to properly administer the subject trusts and preserve the trust assets. (2 nd Amended Complaint, paragraph 106.) In ruling on demurrers, the court need not treat as true contentions, deductions or conclusions of fact or law. (Picton v. Anderson Union High School Dist. (1996) 50 Cal.App.4 th 726, ) Plaintiffs also allege that they are informed and believe that defendant Yang has been administering the Survivor s Trust as amended by the 2015 amendment and the 2015 Separate Property Trust since Mr. Grauss death, because defendant Yang and plaintiff s counsel have communicated, defendants responses to discovery and testimony in other cases indicate that defendant Yang is administering the trusts, and that defendant Yang provided an informal trust accounting to plaintiff s counsel. (2 nd Amended Complaint, paragraph 62.) A [p]laintiff may allege on information and belief any matters that are not within his personal knowledge, if he has information leading him to believe that the allegations are true (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550, 67 Cal.Rptr.3d 330, 169 P.3d 559, italics added), and thus a pleading made on information and belief is insufficient if it merely assert[s] the facts so alleged without alleging such information that lead[s] [the plaintiff] to believe that the allegations are true. (Id. at p. 551, fn. 5, 67 Cal.Rptr.3d 330, 169 P.3d 559.) (Gomes v. Countrywide Home Loans, Inc. (2011) 192 Cal.App..4 th 1149, ) Plaintiffs have not specified the facts that were stated in communications between attorney Yang and plaintiffs counsel that led plaintiffs to believe that defendant Yang was administering the trust and not merely acting as counsel for the trustee; have not specified the facts uncovered in discovery in the other actions that led them to believe that rather than acting as counsel for the trustee, defendant Yang had assumed the office and obligations of trustee of 24

25 the two trusts; and preparation and provision of informal trust accounts of behalf of a trustee client is not abnormal. In short, the allegations of fact do not support the allegation stated upon information and belief that defendant Yang assumed the office and obligations of trustee of the two trusts. Inasmuch as a critical element of a breach of trust cause of action is that the defendant is a trustee who owes duties to beneficiaries of the Trust, the plaintiffs have failed to allege sufficient facts to establish that critical element as to defendant Yang and the defendant lawyers. The court also finds that any claims that the defendant lawyers are liable for defendant Ream s alleged trustee misconduct in that they assisted defendant Ream in breaching the Trust is not sufficiently alleged for the same reasons articulated in the court s ruling on the elder abuse cause of action where plaintiffs claimed that defendant Yang assisted defendant Ream in taking property from settlor Grauss. The demurrer to the breach of fiduciary duty and/or trust cause of action is sustained. Plaintiff had three opportunities to sufficiently allege a breach of fiduciary duty and/or trust cause of action and failed. There does not appear to be a reasonable possibility that the pleading can be cured by amendment, the 2 nd amended complaint appears to be incapable of amendment to cure the defect, and plaintiff has not demonstrated how the 2 nd amended complaint can be amended to cure the defect. (See Roman v. County of Los Angeles (2000) 85 Cal.App.4th 316, 322.) The demurrer to the breach of fiduciary duty and/or trust cause of action is sustained without leave to amend. TENTATIVE RULING # 1: DEFENDANTS YANG S, KLOTZ S AND JEAN KLOTZ, A PROFESSIONAL CORP. S DEMURRERS TO THE ELDER ABUSE, CONVERSION AND BREACH OF FIDUCIARY DUTY AND/OR TRUST CAUSES OF ACTION ARE SUSTAINED 25