Hutchings v. Drommerhausen, B191211 (Cal. App. 4/30/2007)

• Court: California Court of Appeals
• Writing for the Court: Turner
• Decision Date: 30 April 2007
• Docket Number: B191211
• Citation: Hutchings v. Drommerhausen, B191211 (Cal. App. 4/30/2007) (Cal. App. 2007)
• Parties: DEBRA D. HUTCHINGS, as Trustee, etc., Plaintiff and Respondent, v. DANIEL D. DROMMERHAUSEN III, Defendant and Appellant.

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DEBRA D. HUTCHINGS, as Trustee, etc., Plaintiff and Respondent, v. DANIEL D. DROMMERHAUSEN III, Defendant and Appellant.

B191211

Court of Appeals of California, Second Appellate District, Division Five

April 30, 2007

NOT TO BE PUBLISHED

Appeal from an order of the Superior Court of Los Angeles County, Nos. BP083462, BP083463, BP086023, Aviva K. Bobb, Judge and Eli A. Chernow, Temporary Judge. (Pursuant to Cal. Const., art. VI, § 21.). Affirmed.

Bartsch & Webb, Duane L. Bartsch and Eric L. Webb for Defendant and Appellant.

Loeb & Loeb, Adam F. Streisand, and Nicholas J. Van Brunt, for Plaintiff and Respondent.

TURNER, P. J.

I. INTRODUCTION

In this consolidated appeal, Daniel G. Drommerhausen III, (Daniel)¹ challenges 3 separate orders of the probate court declaring that 38 real properties and 11 bank and brokerage accounts belong to: the Estate of Daniel G. Drommerhausen II; the Estate of Marjorie M. Drommerhausen; or the Drommerhausen Family Trust ("the trust). Daniel G. Drommerhausen and Marjorie Drommerhausen were the parents of Daniel and Debra Hutchings. Ms. Hutchings, who is the executor of the parents' wills and the sole successor trustee of the trust, filed three Probate Code² section 850 petitions to confirm that the real properties and accounts belong either to the estates or the trust. The probate court entered the three orders following a stipulated trial by reference before Retired Superior Court Judge Eli Chernow. We affirm.

II. BACKGROUND

A. The Petitions

Mr. Drommerhausen and his wife, Ms. Drommerhausen, spent over 40 years acquiring real estate. Mr. Drommerhausen apparently used various methods to acquire the property including making purchases through various names, fictitious identities, and businesses. The record disclosed that, on occasions, property was acquired or deeds were recorded in the names of Ms. Hutchings or Daniel without their knowledge. Ms. Drommerhausen acted as a bookkeeper and a rental sales agent. The parties agreed that Ms. Hutchings took virtually no role in the family business. However, Daniel was involved in the family real estate business for at least 25 years. Although the level of his participation in the real estate business was disputed, Daniel received a salary of approximately $4,000 a month for his services.

Mr. Drommerhausen and Ms. Drommerhausen created the trust in December 1995. Schedule A of the trust identified certain real properties that were conveyed to the instrument at the time it was established. Ms. Hutchings and Daniel were named as successor co-trustees and are equal beneficiaries under the trust. Article I(A) of the trust provides: "This Trust was created to hold the Settlors' combined estate and provide continuity of management of the estate, both during the Settlors' lifetimes and upon the Settlors' deaths to avoid probate of the estate. During the lives of the Settlors, all Trust benefits shall accrue to the Settlors. At the death of a Settlor, any property remaining outside of the Trust may pass to the Trust estate through provisions of the deceased Settlor's Last Will and Testament (Pour-Over Will). After the death of both Settlors, all Trust benefits shall pass to their beneficiaries as provided herein."

Also on December 20, 1995, Mr. Drommerhausen and Ms. Drommerhausen executed wills which contained identical provisions stating that the assets of each estate would pour over to the trust. The pour-over provisions provide that upon decedent's death: "I GIVE the entire residue of my estate to the Trustee then in office under that trust as named above. I direct that the residue of my estate shall be added to, administered and distributed as part of the Trust . . . ."

Mr. Drommerhausen died on January 19, 2003. Ms. Drommerhausen died on August 10, 2003. On April 28, 2004, Ms. Hutchings was appointed sole executor of the wills of Mr. Drommerhausen and Ms. Drommerhausen. On June 3, 2004, the probate court granted an ex parte application suspending Daniel's powers and enjoining him from taking further actions with respect to the trust property. Ms. Hutchings was appointed sole interim trustee of the trust.

On December 1, 2004, Ms. Hutchings, in her capacity of executor and trustee, filed three section 850 petitions to determine right title and ownership of property: In the Matter of the Drommerhausen Family Trust, u/d/t dated December 20, 1995, case No. BP086023; In the Matter of the Estate of Daniel G. Drommerhausen II, deceased, case No. BP083463; and In the Matter of the Estate of Marjorie Moraw Drommerhausen, deceased, case No. BP083462. The petitions alleged that disputes had arisen between Ms. Hutchings and Daniel concerning the ownership of certain real properties and bank and brokerage accounts. The petitions alleged that when there is real or personal property held in the name of "Daniel G. Drommerhausen" without a Roman numeral II or III, Daniel contended that he owned the property despite evidence to the contrary. The petitions further alleged that title to certain properties were held in Daniel's name but were actually owned by either Mr. Drommerhausen "and/or" Ms. Drommerhausen and, therefore, belonged to their estates.

On January 20, 2005, Ms. Hutchings was appointed sole successor trustee pursuant to the parties' stipulation. The parties also stipulated that the matter would be submitted to Retired Judge Chernow for trial by reference pursuant to Code of Civil Procedure section 638. The probate court entered judgment following the referee's recommendations as to the ownership of the disputed properties.

As previously noted, trial of the three separate petitions took place before Retired Judge Chernow over a nine-day period. At the trial, Ms. Hutchings's theory was that Mr. Drommerhausen had executed numerous real estate sham transactions over the years. This included transferring title by grant and trust deeds and foreclosure sales while maintaining control and beneficial ownership of the properties. The theory was that Mr. Drommerhausen did this in order to avoid paying taxes and to mislead creditors. Daniel contended: he is the owner of properties expressly titled Daniel G. Drommerhausen III; he is the owner of properties titled "Daniel G. Drommerhausen" with no Roman numeral; and he owns some real properties based on the parents' promises to convey the properties to him upon their deaths for his decades of service to the family real estate business in reliance on the promises. Daniel further claimed he is the owner of 11 bank accounts by right of survivorship as a joint owner of the accounts.

B. The Trial

1. Overview

Several witnesses testified and numerous documents were entered into evidence. Because of the nature and number of the claims in this case, evidence related to the specific claims raised by the parties is set forth in the discussion portion of this opinion. But we shall set forth the main characters' testimonies at this point for purposes of clarity.

2. Daniel's Testimony

Ms. Hutchings called Daniel to testify under Evidence Code section 776. Daniel testified that he worked for his parents' real estate business for about 25 years. He was paid about $4,000 a month with occasional bonuses. At times, his parents would tell him to keep the rents that he had collected. His parents paid for his health insurance about the mid-1990's after Daniel was divorced.

Daniel testified that Mr. Drommerhausen considered Ms. Hutchings's husband, David Hutchings, to be a "baboon" waiting to get control of the parents' properties after they died. Ms. Drommerhausen was obsessed with making sure that Mr. Hutchings never got any of the estate property. The parents, however, wanted the property to be divided equally. Daniel also testified that it was his intention at the time of his parents' deaths to claim properties outside the trust in order to share with Ms. Hutchings. According to Daniel, their father intended that the properties be held as a total unit for the benefit of everyone. However, things changed when Daniel and Ms. Hutchings became involved in litigation. The litigation was precipitated in part because Ms. Hutchings wanted to claim properties for the estates and to pay taxes. Daniel testified at his deposition that his parents did not file any income tax returns for about 10 years. Daniel wanted Ms. Hutchings to help with the family business. However, he never heard his parents ask her to give up a successful career to move to Los Angeles from Northern California.

Daniel prepared his 1996 marital settlement agreement on instructions from his ex-wife's attorney and under duress. Daniel did not include properties he was now claiming in his 1996 marital settlement agreement. Daniel's explanation was that the marital settlement agreement was signed by him under duress. Also, the marital settlement agreement was prepared by the attorney for Daniel's former spouse. But at Daniel's deposition, no mention was made of the ex-wife's attorney's advice to omit the 50 properties from the marital settlement agreement. Daniel did not remember that at his deposition he had not mentioned that his ex-wife's attorney advised him not to include the information about the 50 properties he was claiming. Daniel also testified that he signed the 1996 marital settlement agreement in haste. In the 1996 marital settlement agreement, he listed: the VIN numbers for his motorcycles; promissory notes of which he was the beneficiary; bonds by their numbers; and all his firearms with their serial numbers. However, he did not identify or list any of the disputed properties.

After Mr. Drommerhausen died in 2003, Daniel discovered a note dated November 15, 1992. On November 15, 1992, Mr. Drommerhausen wrote a note to Daniel explaining how to avoid paying estate taxes on the real properties by claiming properties held without a Roman numeral III. The handwritten note which was introduced at trial as exhibit 9-3 provides in part: ...