Abusing a confidential relationship

[EstateQuestion]

What is the name of your state (only U.S. law)? California

Recent probate trial where judge said: "to overcome by evidence of an agreement or understanding between parties that the title reflected on a deed is not what the parties intended (Fossum, supra, at 344). Citing the burden of proof was not satisfied" by the plaintiff. Does the burden of proof change if there was a confidential/fiduciary relationship that has been abused by the defendant? The relationship is a rich brother, poor sister, where brother initially bought a rental then sold to sister. Sister used brother's cash for purchase. Brother supplied numbers for rent income and deductions to sister, who entered them into her taxes. She did not receive the rental income however though claimed on her taxes. Brother has died and his Will says to return property to his estate. Sister refuses which seems like an abuse of the confidential relationship. Am contemplating filing an appeal.

Thanks for your thoughts.

 

[adjusterjack]

You have a confusing array of prior posts with inconsistent pronouns and I can't tell how this post relates.

You've written what the judge said about "proof" but what was the outcome of the trial?

You write that sister refuses to return the property. Well, she owns it. Did the judge say she had to return it? Not return it?

If property is not owned by a testator at the time of his death, then nothing he says in his will about the property means anything.

Who are you in this scenario?

Do you have a lawyer?

 

[EstateQuestion]

Sorry for any confusion about the previous posts. In the recent trial, the judge let the sister keep the property. I posted the question because I found an article from an attorney in Colorado that confidential relationships matter and could shift the burden of proof from the plaintiff to the defendant. The article (http://dwkpc.net/client-resources/articles/the-imposition-of-constructive-trusts-and-other-concepts-at-probate-part-i)
stated items such as:

there is the intention and implicit understanding that the person holding title will use the property for the benefit of the transferor during his or her lifetime and that it will be shared with other beneficiaries at death.

In most cases, the transferee acts in accordance with the transferor’s wishes and shares the intended property with the transferor or other beneficiaries after the transferor’s death. However, the transferee sometimes suffers a change of mind, decides to not honor the transferor’s intentions, and asserts unrestricted claims to ownership of the transferred property.

However, even when the transferor cannot be shown to have lacked legal capacity or the intent to make a gift, the operation of the remedy of the imposition of a constructive trust or other concepts can be brought to bear on situations that involve confidential relationships or undue influence justifying setting aside the transfer or recognizing the rights of the transferor (or, after death, the transferor’s heirs or devisees) in the property.

While it may be possible to show undue influence in connection with the original transfer,10 if the existence of a confidential relationship has been established, a transaction may be set aside and a constructive trust imposed if that relationship has been abused. It is not necessary for the abuse to be the procuring cause of the original conveyance. The abuse of the confidential relationship can be merely the failure to honor the transferor’s intentions with respect to the original transfer, which would not have been made but for the confidential relationship.11

Under Colorado law, in cases involving a confidential or fiduciary relationship to the transferor, including the 1975 Colorado Supreme Court case of Judkins v. Carpenter, the burden of going forward with evidence establishing that the transaction was not the result of undue influence shifts to the defendant.26

Having read the article prompted me to post the question here to see if there is any validity or application in California. My mom is the executor of the estate and does have a lawyer.

Thanks for your reply.

 

[Silverplum]

California is not under Colorado's legal control. (But you clearly should be. )

Your Mom has an attorney: she should consult with her/him.

 

[adjusterjack]

In ANY civil litigation the plaintiff initially has the burden to bring forth evidence supporting his claim (i. e. to make a prima facie case). Prima facie means that, upon initial examination, sufficient corroborating evidence appears to exist to support a case. It denotes evidence that, unless rebutted, would be sufficient to prove a particular proposition or fact.

To that extent, the CO decision would apply anywhere.

In the brother's estate vs the sister, had the estate (through its counsel) submitted sufficient evidence of wrongdoing on the part of the sister then, yes, the burden would have shifted to the sister to present evidence rebutting the prima facie evidence.

My guess is that the judge found no evidence of wrongdoing on the part of the sister so there was no burden placed on the sister to raise a rebuttal.

Apparently, the estate is claiming the sister engaged in undue influence in getting the brother to help her buy the house.

Where's the evidence?

Not hearsay, speculation, innuendo, allegations, etc.

Evidence.

You've written the following:

rich brother, poor sister, where brother initially bought a rental then sold to sister. Sister used brother's cash for purchase.

That looks to me like the brother willingly and happily helped his sister get a house.

Again, what evidence is there to the contrary?

 

[EstateQuestion]

Again thanks so much for the thoughtful replies. Ok, last question -

What the plaintiff supplied besides the Will were a series of handwritten documents by the brother claiming the property as his as well as other properties in his lifetime. The documents were seen by the sister according to her testimony. His long standing intent apparent from the documents is the property belongs to him and not a gift to the sister. Given the sister saw his intentions from the documents that the property was his while alive and did nothing to rebuff his claim then and now after his death claim the property as hers, does that constitute fraud or abuse of their confidential relationship or sister is a snake or ?

Thanks again.

(P.S. sister already has house that brother loaned, not given, down payment for. The subject property is a six unit rental similar to other properties he owned)

 

[Zigner]

Again thanks so much for the thoughtful replies. Ok, last question -

What the plaintiff supplied besides the Will were a series of handwritten documents by the brother claiming the property as his as well as other properties in his lifetime. The documents were seen by the sister according to her testimony. His long standing intent apparent from the documents is the property belongs to him and not a gift to the sister. Given the sister saw his intentions from the documents that the property was his while alive and did nothing to rebuff his claim then and now after his death claim the property as hers, does that constitute fraud or abuse of their confidential relationship or sister is a snake or ?

Thanks again.

(P.S. sister already has house that brother loaned, not given, down payment for. The subject property is a six unit rental similar to other properties he owned)

This matter is not something that can be resolved through an internet message board. Attorneys are needed for the involved parties.

 

[adjusterjack]

This matter is not something that can be resolved through an internet message board.

I agree with Zigner, but I want to point out some of the fallacies in the estate's argument.

What the plaintiff supplied besides the Will were a series of handwritten documents by the brother claiming the property as his as well as other properties in his lifetime.

Those documents are worthless because he deeded the house to his sister. The deed trumps all of that.

The documents were seen by the sister according to her testimony.

So?

Suppose I sign over the title of my car to you. You take it to the DMV and get title in your name. A few days later I come to you and show you a piece of paper that says "Dear EQ, I still own my car even though I let you title it in your name." You look at the paper, shrug, and walk away. Did you just agree that it's still my car? Of course not.

His long standing intent apparent from the documents is the property belongs to him and not a gift to the sister.

Again, his legal act of deeding the house to her invalidates any intention that HE might have had in the matter. There is certainly no evidence that the sister accepted those conditions and that's probably why the judge shot down the constructive trust theory.

Given the sister saw his intentions from the documents that the property was his while alive and did nothing to rebuff his claim then and now after his death claim the property as hers, does that constitute fraud or abuse of their confidential relationship

No.

Not one bit.

She isn't "claiming" that the property is hers. She OWNS the property because her brother legally and irrevocably transferred ownership to her by deed.

If he wanted it any other way, there were other ways he could have structured the deal. But he didn't.

or sister is a snake or ?

Nothing illegal about being a snake.

(P.S. sister already has house that brother loaned, not given, down payment for.

The legal presumption is that when a person does something one way when other, more efficacious methods are available, he cannot then claim that he didn't mean it the way he did it.

In other words, if it were really a loan he could have had the sister sign a promissory note or even written a mortgage with the property as security. He didn't do that. He just gave her the money with no evidence that it was anything other than a gift.

Wishing things were different doesn't count.

The estate is free to file an appeal and try to prove that the judge made a mistake in applying the law to the facts presented but I still see this:

rich brother, poor sister, where brother initially bought a rental then sold to sister. Sister used brother's cash for purchase.

As a gift from brother to sister and I could be wrong but I predict that the appellate court will also see it that way.

 

[EstateQuestion]

Thanks so much for spending the time sharing your thoughts. I know I used up my last question, but ask you to indulge me one last, last question which goes back to my original question concerning confidential relationships and if they have if any effect on property ownership. I found the following from a California appeal (http://law.justia.com/cases/california/court-of-appeal/2d/60/116.html)

"Although the so-called majority American view is that no trust will arise upon a repudiation of the oral promise to reconvey, several important exceptions to that rule have been recognized. These exceptions are perhaps best stated in section 182 of the Restatement of the Law of Restitution and section 44 of the Restatement of the Law of Trusts, the two sections being substantially identical. Section 182 provides: "Where the owner of an interest in lands transfers it inter vivos to another upon an oral trust in favor of the transferor or upon an oral agreement to reconvey the land to the transferor, and the trust or agreement is unenforceable because of the Statute of Frauds, and the transferee refuses to perform the trust or agreement, he holds the interest upon a constructive trust for the transferor, if

"(a) the transfer was procured by fraud, misrepresentation, duress, undue influence or mistake of such a character that the transferor is entitled to restitution, or

"(b) the transferee at the time of the transfer was in a confidential relation to the transferor, or

"(c) the transfer was made as security for an indebtedness of the transferor."

These exceptions, and particularly the one relating to confidential relations, are recognized in nearly every American state (see cases collected 3 Bogert on Trusts and Trustees, p. 1594, § 496; 1 Scott on Trusts, p. 253, § 44.2), and have clearly been adopted in California. (See California Annotations to the Restatement of the Law of Trusts (§ 44) and to the Restatement of the Law of Restitution (§ 182). [2] It is well settled in this state that breach of the oral promise to reconvey by the transferee or his administrator when the transferee was in a confidential relationship with the transferor at the time of the transfer constitutes sufficient "fraud" to create the constructive trust."

It seems like the car title analogy mentioned above follows the "so-called majority American view is that no trust will arise upon a repudiation of the oral promise to reconvey". But the above also says for california "It is well settled in this state that breach of the oral promise to reconvey by the transferee or his administrator when the transferee was in a confidential relationship with the transferor at the time of the transfer constitutes sufficient "fraud" to create the constructive trust."

So I'm puzzled. It appears the California appeals court gave weight to confidential relationships with regards to property transfers, but maybe not anymore? or am I misunderstanding what is being said?

Thanks again for your time and sorry if I made your brains hurt with this stuff. Take care.

 

[adjusterjack]

I read the case decision and came away with this statement by the court:

"It is well settled in this state that breach of the oral promise to reconvey by the transferee or his administrator when the transferee was in a confidential relationship with the transferor at the time of the transfer constitutes sufficient "fraud" to create the constructive trust."

I agree that there was a confidential relationship between the brother and sister but, based on the court's statement, I don't believe that the exception arises UNLESS there is a breach of an oral promise to reconvey.

Where is the EVIDENCE that the sister ever made an oral promise to reconvey?

The brother's own "belief" is not EVIDENCE of such a promise.

Steinberger v. Steinberger is a 1943 decision that has been subsequently cited 75 times since 1943 according to Google Scholar.

See:

http://scholar.google.com/scholar?q=steinberger+v.+steinberger&btnG=&hl=en&as_sdt=4%2C5

Clicking on "Cited by 75" brings up all the subsequent decisions.

I think it's not just a matter of proving that there was a confidential relationship (a given between brother and sister) but there has to be evidence that an oral promise to reconvey was made.

 

[LdiJ]

And**************

The trial court originally ruled in favor of the estate, that was appealed and was remanded by the appellate court. Second time around the court ruled in favor of the sister.

Its really a done deal. Sure, the estate could appeal the second ruling, but I think its a waste of money.

 

[EstateQuestion]

Thanks everyone for your thoughts. Don't know what evidence there is about an oral agreement if any. Will do some research. In regards to the comments from LdiJ

"The trial court originally ruled in favor of the estate, that was appealed and was remanded by the appellate court. Second time around the court ruled in favor of the sister.

Its really a done deal. Sure, the estate could appeal the second ruling, but I think its a waste of money."

The appellate court ruled that the question concerning the properties was not before the court, just the Will contest. The recent Probate trial returned the bulk of the properties taken by another sister belongs to the estate with penalties, but the other sister, as referenced above, can keep the property that is in her name. It is really sad the toll this case has taken on a once large loving family.

Thanks again everyone.

 

[EstateQuestion]

I read the case decision and came away with this statement by the court:



I agree that there was a confidential relationship between the brother and sister but, based on the court's statement, I don't believe that the exception arises UNLESS there is a breach of an oral promise to reconvey.

Where is the EVIDENCE that the sister ever made an oral promise to reconvey?

The brother's own "belief" is not EVIDENCE of such a promise.

Steinberger v. Steinberger is a 1943 decision that has been subsequently cited 75 times since 1943 according to Google Scholar.

See:

http://scholar.google.com/scholar?q=steinberger+v.+steinberger&btnG=&hl=en&as_sdt=4%2C5

Clicking on "Cited by 75" brings up all the subsequent decisions.

I think it's not just a matter of proving that there was a confidential relationship (a given between brother and sister) but there has to be evidence that an oral promise to reconvey was made.

Thanks for your thoughts which begs the question, in the referenced appellate ruling the uncle, who was the only one on title, had died. How could they have proved the oral promise between the parties if one had died? The other side could have said the remaining party made up the story about the promise.

 

[adjusterjack]

Thanks for your thoughts which begs the question, in the referenced appellate ruling the uncle, who was the only one on title, had died. How could they have proved the oral promise between the parties if one had died? The other side could have said the remaining party made up the story about the promise.

Exactly my point.

And exactly why agreements regarding real estate have to be in writing to be enforceable (statute of frauds).

Otherwise there would have to be a witness who could testify to a conversation between brother and sister whereby sister made an oral promise to reconvey.

In your case I'm guessing that there was no such witness which is why the sister got to keep the house that she OWNED at the time of her brother's death.

 

[EstateQuestion]

Exactly my point.

And exactly why agreements regarding real estate have to be in writing to be enforceable (statute of frauds).

Otherwise there would have to be a witness who could testify to a conversation between brother and sister whereby sister made an oral promise to reconvey.

In your case I'm guessing that there was no such witness which is why the sister got to keep the house that she OWNED at the time of her brother's death.

In my case ,besides a witness, what about course of conduct and credibility of the parties. Aren't they part of verifying a verbal promise ? The brother maintained the property during his lifetime and kept all of the income according to the sister's testimony. Seems like the brother's conduct leads in the direction that it was his property. His writings while alive stating his "belief" that the property is his seems to add to the the conduct. With respect to the credibility of the parties, I'm a little unclear about what that means, but his actions and writings seem compelling. I know I have greatly exceeded my time for this topic and really appreciate everyone's time.