Estate of Litchfield CA6 (2025) · DecisionDepot

Estate of Litchfield CA6

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California Court of Appeal Sep 23, 2025 No. H051091Unpublished

Filed 9/23/25 Estate of Litchfield CA6

NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

Estate of Sherry A. Litchfield. H051091, H051414 (Monterey County Super. Ct. No. 20PR000286)

CRAIG WALDMAN et al.,

Petitioners and Appellants,

BRENT WALDMAN et al.,

Objectors and Respondents.

In this probate matter, two siblings dispute the validity of agreements between their mother (now deceased) and another sibling that affect trust property. Craig Waldman and Jodi Shubin (Craig and Jodi,1 or appellants), who are beneficiaries of the trust, challenge two contracts between their eldest brother, respondent Brent Waldman, and their mother, Sherry Litchfield, the trust’s settlor and original trustee.

1 For clarity, we refer to the parties and other family members by their

first names as they appear in the briefs and record. (See, e.g., In re Marriage of Leonard (2004) 119 Cal.App.4th 546, 550, fn. 2.)

The agreements at issue are the third amendment to a 2001 promissory note documenting a loan by Sherry to Brent (Note), which Sherry later assigned to the trust, and a lease and right to purchase agreement (Agreement) for Sherry’s primary residence, the principal trust asset. The Agreement allowed Brent, upon Sherry’s death, to exercise a first right to purchase the residence at a specified price for the purpose of transferring it to his son (Sherry’s grandson), respondent Chase Waldman. After Sherry’s death, appellants filed a Probate Code section 850 petition against Brent, Chase, and professional fiduciary Laurie Classen in her capacity as trustee (together, respondents), seeking the return of trust property, recission of the third amendment to the Note, and cancellation of the Agreement. The petition also asserted breach of fiduciary duty, financial elder abuse, and breach of contract claims against Brent. After a bench trial, the trial court rejected appellants’ claims. The court found that Brent had satisfied his burden at trial to demonstrate that the third amendment to the Note and the Agreement were fair and in good faith in all respects. The court rejected appellants’ tort, contract, rescission, cancellation, and return of trust property claims and entered judgment in respondents’ favor. In postjudgment proceedings on costs and attorney fees, the court awarded respondents attorney fees pursuant to fee clauses contained in the Note and Agreement. The court apportioned the fee awards to exclude fees incurred in connection with appellants’ financial elder abuse claims. Appellants have separately appealed from both the judgment on the petition and the postjudgment order on costs and fees. As explained further below, we reject appellants’ challenges to the judgment but reverse the costs and fees order and remand with directions.

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The statement of decision addressed the financial elder abuse and breach of fiduciary duty claims first. The trial court rejected appellants’ efforts to portray Sherry as vulnerable to persuasion by Brent. The court found “[w]hile Sherry was in her early 80’s at the time of the instant transactions, there was little controversy over Sherry’s determination and abilities to manage her own affairs and even the affairs of other elderly friends. . . . She was described as independent in her thinking and management of her financial and other affairs. Sherry’s mental abilities were not impaired by alcohol or other infirmities.” The court rejected Jodi’s and Craig’s depiction of their mother as an alcoholic and physically feeble as “not credible.” It found that Sherry was not influenced by Brent to sign the third amendment to the Note and/or the Agreement: “Sherry understood the terms of the [l]ease [o]ption sufficiently to know that it would assist her in her goals to move to Santa Rosa, purchase a new home and provide her with freedom from the burdens of significant repairs to and management of Sierra Vista. Not surprisingly[,] given her independent spirit and family dynamics, Sherry signed the [l]ease [o]ption outside of the presence of any of her family members.” The court found unpersuasive attorney Reese’s testimony that Sherry acquiesced to Brent to sign the Agreement, stating his testimony “is without independent support and [credibility].” The trial court evaluated the fairness of the transactions, considering the terms of the agreements and economic results of each. It viewed the Agreement’s terms “along with Sherry’s other desires that Brent’s confidential relationship required him to balance,” including that she did not want to pay taxes on Sierra Vista, wanted to keep the home in the family, and wanted to simplify her life and be relieved of the stress of maintaining the property. It noted that Sherry retained counsel to assist with the

We next consider Brent’s entitlement to attorney fees incurred in defending against appellants’ other Note-related claims, including for breach of fiduciary duty (count 6) and rescission (count 7), as well as appellants’ general claim for return of trust property (count 1). We reject as forfeited Brent’s and Chase’s alternative contention—asserted briefly in the Waldman respondents’ brief on appeal and raised by counsel at oral argument—that the trial court’s broad equitable powers over trusts provides an alternative basis to uphold the attorney fee award, should the contractual basis for the award fail. The Waldman respondents did not make this argument in the trial court, and we decline to address it for the first time on appeal. (See People v. Trujillo (2015) 60 Cal.4th 850, 856 [failure to timely assert a right before the tribunal having jurisdiction to determine it may forfeit the right on appeal]; see also Truck Ins., supra, 56 Cal.App.5th at p. 635.) The Note authorizes one-way reasonable attorney fees, stating “I [Brent] agree to pay such additional sum, as the court may adjudge reasonable” when there is a “suit . . . commenced or an attorney employed to enforce the payment of this note.” (Italics added.) Interpreted in its “ ‘ “ ‘ordinary and popular sense’ ” ’ ” (Mountain Air, supra, 3 Cal.5th at p. 752), this phrasing suggests that attorney fees are available only for fees incurred by the creditor to enforce payment of the Note. In arguing that this provision is broad enough to encompass the noncontractual causes of action, respondents point to what is generally understood to be courts’ liberal construction of the term “on a contract” under Civil Code section 1717. (See Douglas E. Barnhart, Inc. v. CMC Fabricators, Inc. (2012) 211 Cal.App.4th 230, 240 (Douglas); Orozco, supra, 36 Cal.App.5th at p. 407.) “An action (or cause of action) is ‘on a contract’ for purposes of [Civil Code] section 1717 if (1) the action (or cause of action)

The fee clause in the Agreement differs from these cases in that it authorizes fees incurred for defending claims “arising out of the enforcement of any provision of this Agreement.” “ ‘ “[W]e look to the pleading to determine the nature of plaintiff’s claim.” ’ ” (Amtower v. Photon Dynamics, Inc. (2007) 158 Cal.App.4th 1582, 1602.) Our review of the petition confirms that both causes of action for breach of fiduciary duty and cancellation do, in fact, “arise[] out of the enforcement of the” Agreement’s provisions pertaining to the lease terms, purchase amount, extension terms, and security (or lack thereof) on the carryback loan after exercise of the purchase option. The petition specifically alleges that Brent breached his fiduciary duty by entering into the Agreement “for the bases discussed in paragraph [No.] 52.” That paragraph lists, inter alia, allegedly inequitable terms of the Agreement, such as below market value rent without “true-ups,” a purchase amount of $800,000 with no “true-ups” and reductions for rent paid, an unsecured promissory note for the carryback loan after exercise of the option, and so forth. The petition also alleges that Brent “has not paid the $80,000 in consideration listed in the” Agreement. The trustee points out, based on these and other allegations in the petition, that “[a]ppellants varyingly sought to have [the Agreement] voided and to ensure Brent paid $80,000 in cash as his consideration for the option and have a higher sale price and higher monthly rental amount applied, while removing certain of the credits for which the [A]greement provided.” Thus, while Brent’s fiduciary duty arose independent of the contract because of his confidential relationship with Sherry, appellants’ claim for breach of that duty is largely based on, and therefore arises out of, the enforcement of specific provisions of the Agreement. A similar logic applies to the cancellation cause of action, which the petition states is based on the

section states in relevant part, “If the consent of any one who should have been joined as plaintiff cannot be obtained, he may be made a defendant, the reason thereof being stated in the complaint.” (Code Civ. Proc., § 382.) Its “purpose is to protect the active parties to a lawsuit by effecting the involuntary joinder of a recalcitrant plaintiff. This ensures that the party so joined will be bound by any resulting adjudication.” (Ferraro v. Camarlinghi (2008) 161 Cal.App.4th 509, 536 (Ferraro).) Courts have long held “that one so joined is a defendant in name only; he or she is ‘ “in reality” ’ a plaintiff.” (Id., at p. 537; see Romero v. Pacific Gas & Electric Co. (2007) 156 Cal.App.4th 211, 215; Watkins v. Nutting (1941) 17 Cal.2d 490, 498 (Watkins).) In a case involving damages, “ ‘[a] jury is properly instructed upon the issue of damages suffered by a party joined as a defendant under [Code of Civil Procedure] section 382 even though that “defendant” does not participate in the trial.’ ” (Romero, at p. 215.) Furthermore, judgment is not properly entered against a nominal defendant “because no relief was demanded from them.” (Watkins, at p. 498.) Classen seeks to distinguish these cases as personal injury actions, but her position is contrary to case authority addressing the position of a nominal defendant joined pursuant to Code of Civil Procedure section 382 and reiterating that party’s treatment as, in effect, a plaintiff. (See, e.g., Ferraro, supra, 161 Cal.App.4th at p. 537 [rejecting purported entry of default against nominal defendant and noting “[f]or at least 60 years it has been settled that a default cannot properly be entered against such a ‘defendant’ ”]; Watkins, supra, 17 Cal.2d at pp. 498–499 [holding in wrongful death action that “[n]o judgment could properly be taken against [children of decedent joined as defendants] because no relief was demanded from them, and the order of the court directing the clerk to enter their default was ineffective for any

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

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