Keitel v. Heubel

• Decision Date: 30 October 2002
• Docket Number: No. A095703.,A095703.
• Citation: 103 Cal.App.4th 324,126 Cal.Rptr.2d 763
• Parties: Mary C. KEITEL, Plaintiff and Respondent, v. George W. HEUBEL, et al., Defendant and Appellants.
• Court: California Court of Appeals Court of Appeals

126 Cal.Rptr.2d 763

103 Cal.App.4th 324

Mary C. KEITEL, Plaintiff and Respondent, v. George W. HEUBEL, et al., Defendant and Appellants.

No. A095703.

Court of Appeal, First District, Division 2.

October 30, 2002.

Rehearing Denied November 25, 2002.

Review Denied January 15, 2003.

Daniel Ray Bacon, for Appellants.

Brian R. Dinday, for Respondent.

HAERLE, J.

I. INTRODUCTION

George W. and Peggy Heubel appeal from an order permitting a judgment creditor to execute against property held in their revocable trust. After filing this appeal, the Heubels filed a petition in federal court seeking protection from creditors pursuant to Chapter 13 of the Bankruptcy Code. The Heubels did not notify this court about their bankruptcy filing. Respondent Mary C. Keitel, who is George Heubel's sister, did notify us about it, however. Thereafter, we advised the Heubels and their counsel of our intention to impose sanctions against them for filing a frivolous appeal and for failing to notify us about the filing and status of the bankruptcy case. The Heubels responded that their bankruptcy case barred us from taking any action against them. Thereafter, the Heubels' bankruptcy case was dismissed with prejudice.

We hold that the bankruptcy case did not preclude us from imposing sanctions on the Heubels and their appellate counsel. We affirm the order permitting Mary Keitel to execute against property in the Heubels' revocable trust. We also find that the Heubels' appeal is frivolous and we impose sanctions on them and their counsel for filing a frivolous appeal and for their unreasonable infractions of the rules governing appeals.

II. FACTS AND PROCEDURAL HISTORY

Mary Keitel obtained a judgment for fraud and undue influence against her brother George Heubel and George's wife, Peggy. A jury found that the Heubels deprived Keitel of her fair share of her mother's estate. The issues presented on appeal require only a brief summary of the evidence supporting the jury's verdict in the underlying action against the Heubels. The Heubels unduly influenced Caroline Heubel (Caroline), Mary Keitel and George Heubel's mother, by extracting from her various documents, including a power of attorney, which allowed them to accomplish transfers of realty, bank accounts, and other assets to their sole control. Although Caroline had made clear her desire that her estate be divided equally between her children upon her death, when Caroline died, the Heubels gave Keitel a small sum and kept the bulk of Caroline's estate for themselves without ever filing a probate action. After Keitel learned the Heubels had removed virtually everything from Caroline's estate with inter vivos transfers, she brought the underlying action claiming she had been deprived of her rightful share of her mother's estate by the Heubels' fraud and undue influence.

On June 6, 1997, Keitel obtained a jury verdict against the Heubels in the amount of $361,267. The verdict was based upon special findings of undue influence, fraud by intentional misrepresentation, fraud by concealment, and fraud by false promises. Judgment was entered and filed on June 20, 1997. The Heubels appealed that judgment and specifically challenged the sufficiency of the evidence to support the verdict. On February 25, 1999, we affirmed the judgment, which is now final. (Keitel v. Heubel (Feb. 25, 1999, A079982) [non-pub. opn.].)

Meanwhile, on June 19, 1997, the day before judgment was entered, the Heubels executed and recorded four grant deeds. In each case, the Heubels granted real property to Mike Lunardi, Angela Lunardi and Sarah Heubel as "Co-Trustees of The George William Heubel and Peggy Anne Heubel Blind Trust dated June 19, 1997." A "Declaration of Trust" executed by the Heubels that same day described the George William Heubel and Peggy Anne Heubel Blind Trust as a "revocable living trust." In the trust instrument, the Heubels expressly reserved the right to "revoke this trust at any time." The instrument also provided that, if the trust was revoked, ownership of the trust property reverted to the Heubels.

When Keitel attempted to levy and execute upon the Heubels' realty to satisfy her judgment, the Heubels sent the Sheriff of Alameda County (the Sheriff) copies of the grant deeds they executed on June 19, 1997. In a letter to the Sheriff dated August 9, 1998, the Heubels stated: "With this letter, we are providing you with copies of grant deeds ... showing how the subject properties are owned.... The properties described are in the possession and control of the Trust as stated on each of the attached deeds." The Heubels concluded their letter as follows: "Again: we are not the owners of record and were not at the time of levy. In consideration of the above, a legal sale of this property cannot take place simply because we are not the owners of the properties referenced in the Notice of Levy."

Thereafter, the Sheriff refused to execute on the realty that the Heubels transferred into their trust without a court order authorizing him to do so. Keitel sought a court order clarifying that, under California law, the Sheriff was authorized to pursue judgment execution on realty transferred into a revocable, inter vivos trust by a judgment debtor. The trial court issued the requested order on July 3, 2001 (the July 3 order).

In the July 3 order, the court found "that the George William Heubel and Peggy Anne Heubel Blind Trust dated June 19, 1997, is a trust for which the settlors retained the power to revoke the trust in whole within the meaning of Probate Code section 18200 and, accordingly, the trust property is subject to the claims of creditors of George William Heubel and Peggy Anne Heubel." Thus, the court ordered: "A writ of execution may issue against the Trustees of the George William Heubel and Peggy Anne Heubel Blind Trust dated June 19, 1997."

The Heubels filed a notice of appeal from the July 3 order on July 17, 2001. The appellants' opening brief was filed on November 9, 2001. On December 28, 2001, the Heubels filed a voluntary joint petition under Chapter 13 of the Bankruptcy Code. Neither the Heubels, their appellate counsel Daniel Ray Bacon, nor their bankruptcy counsel, William Marini, gave this court notice of the bankruptcy petition. We learned about the petition on February 19, 2002, when we received a letter from Keitel's counsel, Brian R. Dinday. According to his letter, it occurred to Dinday at some point after all the briefing in this appeal was complete that nobody had informed this court about the Heubels' bankruptcy case.

On February 27, 2002, we ordered the parties to appear at a hearing before this court to address two issues: (1) whether the Heubels' bankruptcy petition stayed proceedings in this case and (2) whether the Heubels and their counsel should be sanctioned for failing to notify the court about the bankruptcy case. The parties addressed these issues both in writing and at a hearing before us on March 14, 2002.

On May 7, 2002, we notified the Heubels and their appellate counsel, pursuant to rule 26(e) of the California Rules of Court, that we were considering imposing sanctions on them for filing a frivolous appeal and we gave them 10 days to file a written response to our proposed course of action. We did not schedule an additional hearing on the issue of frivolous appeal sanctions for several reasons. First, the Heubels originally waived oral argument notwithstanding the fact that Keitel had filed a motion to impose sanctions against them for filing a frivolous appeal. Second, at the March 14, 2002, hearing, this court expressly advised the Heubels' counsel, Daniel Bacon (hereafter Bacon), that we considered this appeal to be frivolous and invited him to address this issue. Third, the Heubels provided a written response to our May 7 notice that we were considering imposing sanctions for filing a frivolous appeal but did not seek an additional hearing on this issue. In light of these facts, we concluded that scheduling an additional hearing would serve no useful purpose and would be inappropriate in light of the substantial time and expense already generated by these proceedings.

On May 21, 2002, this court filed an opinion in which we imposed sanctions against the Heubels and Bacon, for filing a frivolous appeal and for failing to notify the court about the filing and status of the Heubels' bankruptcy case. Thereafter, Bacon filed a motion to withdraw as counsel for the Heubels. In it he asserted that the Heubels refused to consent to his withdrawal notwithstanding the fact that irreconcilable differences and conflicts of interest precluded him from continuing to represent them. This court had not yet ruled on Bacon's motion to withdraw when our May 21, 2002, opinion became final. We notified the Supreme Court of this fact and requested that this case be transferred back to us. On July 17, 2002, the Supreme Court transferred this case back to us with directions to vacate our May 21, 2002, opinion and to reconsider this matter as we saw fit.

On July 25, 2002, the bankruptcy court granted a motion by Keitel to dismiss the Heubels' bankruptcy case with prejudice and imposed sanctions against both the Heubels and their bankruptcy attorney. The bankruptcy court also prohibited the Heubels from filing a bankruptcy petition under any and all chapters of the bankruptcy code for the next 180 days.

On July 30, 2002, we filed an order granting Bacon's motion to be relieved as counsel for the Heubels. Via the same order, we notified the Heubels and Bacon that we were considering imposing sanctions on them for filing a frivolous appeal, and gave them an opportunity to file written opposition. We held a hearing on that subject on September 18, 2002.

III. DISCUSSION

A. Issues Presented

We are no longer required to consider the impact of the automatic stay resulting from the Heubels' bankruptcy case since that case has now been dismissed with prejudice. H...