Bernard v. Foley

• Citation: 139 P.3d 1196,39 Cal.4th 794,47 Cal.Rptr.3d 248
• Decision Date: 21 August 2006
• Docket Number: No. S136070.,S136070.
• Court: California Supreme Court
• Parties: Angela Ann BERNARD et al., Plaintiffs and Appellants, v. James FOLEY, as Trustee, etc., Defendant and Respondent.

47 Cal.Rptr.3d 248

39 Cal.4th 794

139 P.3d 1196

Angela Ann BERNARD et al., Plaintiffs and Appellants, v. James FOLEY, as Trustee, etc., Defendant and Respondent.

No. S136070.

Supreme Court of California.

August 21, 2006.

Superior Court, Los Angeles County; Robert H. O'Brien^*, Judge.

Robert M. Neubauer for Plaintiffs and Appellants.

Mark T. Eagan and Donna Bader, Laguna Beach, for Defendant and Respondent.

WERDEGAR, J.

[139 P.3d 797]

In this case we determine whether close personal friends of a dependent elder who at the end of her life provided her with personal care, including health care, are "care custodians" for the purposes of statutory provisions that presumptively disqualify care custodians as beneficiaries of testamentary transfers from dependent adults to whom they provide such services. (Prob.Code, §§ 21350, 21351, subd. (d) (hereafter section 21351(d)); Welf. & Inst. Code, § 15610.17, subd. (y).)¹

We conclude that when an unrelated person renders substantial, ongoing health services to a dependent adult, that person may be a care custodian for purposes of the statutory scheme at issue, notwithstanding that the service relationship between the individuals arose out of a preexisting personal friendship rather than a professional or occupational connection. Accordingly, we affirm the judgment of the Court of Appeal.

[139 P.3d 798]

Background

On August 28, 1991, decedent Carmel L. Bosco executed the Carmel L. Bosco Revocable Living Trust (Trust). Over the years, decedent amended the Trust seven times. Plaintiffs, relatives of decedent, brought this action seeking to invalidate the seventh, and final, amendment.

Decedent, a widow with no children, was close to her extended family. Plaintiff Angela Ann Bernard is a niece, Ann Cassell is decedent's sister, Arthur G. Erman and Benny Tumminello are nephews, and Cathy Lee Miller is a nephew's successor in interest. Defendant James Foley is the successor trustee of the Trust. Foley and his girlfriend, Ann Erman (hereafter Erman), were longtime personal friends of decedent. For two months before her death, decedent resided at the Riverside home shared by Foley and Erman, who jointly cared for her during her final illness.

Three days before she died, decedent executed the seventh amendment to the Trust, pursuant to which Foley and Erman each became a 50 percent residuary beneficiary. Neither had been named as a beneficiary in earlier versions of the Trust.

Plaintiffs petitioned the court to invalidate the seventh amendment to the Trust and for a determination of beneficial interests in the Trust estate. They alleged that: (1) decedent was dependent on Foley and Erman, inter alia, for custodial care, from approximately July 15, 2001, until her death; (2) the seventh amendment was the product of undue influence by Foley and Erman; (3) decedent lacked testamentary capacity when she executed the seventh amendment because she was gravely ill and heavily sedated; and (4) Foley and Erman were disqualified to receive a testamentary transfer from decedent because they had been her "care custodians" within the meaning of section 21350, subdivision (a)(6) and did not fall within any exception to that statute.

A bench trial was held at which various witnesses testified, including Foley, Erman and some of the plaintiffs. The parties disputed whether Erman or Foley had received payment for the room, board and services they provided to decedent. Foley and Erman denied they had; Foley in his brief to this court asserts that in any event they "certainly were not under a duty" to take care of decedent. "They were simply performing acts of kindness on a purely volunteer basis as good friends often do for others." The trial court noted that "Ann Erman had a personal relationship with decedent founded on a familial bond,"² ruling that, although there was some evidence of compensation to Erman relating to expenses for decedent's care, the evidence was

[139 P.3d 799]

insufficient to establish a "business relationship." The trial court denied plaintiffs' petition, concluding neither Erman nor Foley were care custodians.

The Court of Appeal reversed, holding that Foley and Erman were "care custodians" of decedent and they had failed to rebut the statutory presumption that decedent's donative transfer to them was procured by undue influence. The Court of Appeal remanded the cause with directions that the trial court enter a new judgment invalidating the seventh amendment to the Trust. We granted Foley's petition for review.

Discussion

A. Statutory Disqualification of Care Custodians

Part 3.5 of division 11 of the Probate Code (hereafter part 3.5), section 21350 et seq., sets forth certain limitations on donative transfers by testamentary instrument.³ Section 21350 lists seven categories of persons who cannot validly be recipients of such donative transfers, including, inter alia, "[a] care custodian of a dependent adult who is the transferor" (id., subd. (a)(6)). The statute provides that the term "care custodian" for these purposes "has the meaning as set forth in Section 15610.17 of the Welfare and Institutions Code." (§ 21350, subd. (c).)⁴ That section, in turn, defines "care custodian" by means of a list of described agencies and persons, concluding in its final

[139 P.3d 800]

subdivision with "[a]ny other . . . agency or person providing health services or social services to elders or dependent adults."⁵ (Welf. & Inst.Code, § 15610.17, subd. (y).)

Section 21351 sets forth several exceptions to section 21350. Relevant for our purposes is subdivision (d) of section 21351, which provides that the prohibition of section 21350 does not apply if "[t]he court determines, upon clear and convincing evidence, but not based solely upon the testimony of any person described in subdivision (a) of Section 21350 [i.e., any prohibited transferee], that the transfer was not the product of fraud, menace, duress, or undue influence."

Once it is determined that a person is prohibited under section 21350 from receiving a transfer, "section 21351 creates a rebuttable presumption that the transfer was the product of fraud, duress, menace, or undue influence. A person who is prohibited from receiving a transfer under section 21350 may still inherit, if [he or she] successfully rebuts the section 21351 presumption (§ 21351, subd. (d)). In order to rebut the presumption, the transferee must present clear and convincing evidence, which does not include his or her own testimony, that the transfer was not the product of fraud, duress, menace, or undue influence. (§ 21351, subd. (d).)" (Estate of Shinkle (2002) 97 Cal.App.4th 990, 993, 119 Cal.Rptr.2d 42.)

As we previously have observed, this statutory scheme supplements the common law doctrine that "a presumption of undue influence, shifting the burden of proof, arises upon the challenger's showing that (1) the person alleged to have exerted undue influence had a confidential relationship with the testator; (2) the person actively participated in procuring the instrument's preparation or execution; and (3) the person would benefit unduly by the testamentary instrument." (Rice v. Clark (2002) 28 Cal.4th 89, 97, 120 Cal.Rptr.2d 522, 47 P.3d 300; see also Graham v. Lenzi (1995) 37 Cal.App.4th 248, 257, 43 Cal.Rptr.2d 407; Estate of Swetmann (2000) 85 Cal.App.4th 807, 816-817, 102 Cal.Rptr.2d 457, and cases cited there.)

[139 P.3d 801]

B. Were Foley and Erman Care Custodians?

That decedent was a dependent adult is undisputed.⁶ The question is whether Foley and Erman fit the statutory definition of "care custodian."

Before the Court of Appeal in this case rendered its decision, two other Courts of Appeal had concluded that a person who cares for a dependent adult out of a preexisting personal friendship, rather than in an occupational or professional capacity, does not fall within the definition of "care custodian" in Welfare and Institutions Code section 15610.17, subdivision (y) and therefore does not face disqualification as a beneficiary under Probate Code section 21350, subdivision (a)(6). (See Conservatorship of Davidson (2003) 113 Cal.App.4th 1035, 6 Cal.Rptr.3d 702 (Davidson); Conservatorship of McDowell (2004) 125 Cal. App.4th 659, 23 Cal.Rptr.3d 10 (McDowell).)

Davidson concerned the estate of an elderly woman, Dolores Davidson, who late in life changed her will and trust so as to benefit a personal friend and neighbor, Steve Gungl, who had cared for her during her declining years. Four years before her death, Davidson executed a will and pour-over trust leaving most of her estate to Gungl, thereby revoking her earlier will and trust that had left most of her estate to her cousin Elaine Morken. In the last decade of Davidson's life, Gungl and his life partner visited Davidson often, took her to the doctor, and helped her with household chores. As Davidson declined, Gungl and his partner assumed ever greater responsibility for her, doing her shopping, paying her bills and taking care of her banking. For her part, Davidson treated Gungl and his partner like family, calling them "her boys." (Davidson, supra, 113 Cal.App.4th at p. 1042, 6 Cal. Rptr.3d 702.)

Morken and her husband, who had lived out of state, moved at one point to California but had infrequent contact with Davidson until they learned she had executed an estate plan favoring Gungl. Thereafter, they made a series of complaints to adult protective services, the police and Davidson's neighbors. Ultimately, Davidson was placed in a conservatorship under the charge of the public guardian, her house was sold, and she was placed in a nursing home, where she declined and died. After her death, the Morkens sued to invalidate

[139 P.3d 802]

the trust and will favoring Gungl, asserting he was a care custodian under section 21350 and therefore disqualified to receive Davidson's donative transfer. The trial court found that, while Gungl was a not a blood relative of Davidson's,...