California Court of Appeals, Second District, Second Division
[As modified Jan. 20, 2015.]
APPEAL fro a judgment of the Superior Court of Los Angeles County. No. BP125282 Michael Levanas, Judge.
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
Greenberg Traurig, Scott D. Bertzyk; Law Offices of Steven W. Kerekes and Steven W. Kerekes, for Plaintiff and Appellant.
Oldman, Cooley, Sallus, Birnberg & Coleman, Marshal A. Oldman, Justin B. Gold, and Jamie N. Gonzalez, for Defendant and Respondent.
Allyn Ferguson (Allyn) and his wife, plaintiff Joline Ferguson (Joline), (collectively, the Fergusons) offered to sell to their attorney, defendant Robert M. Yaspan (Yaspan) and his wife (collectively, the Yaspans) an interest in a London flat they owned. At Yaspan’s suggestion, the Fergusons hired independent counsel and the parties exchanged five drafts before signing a written agreement in 1995. The trial court concluded that Joline’s 2011 petition to set aside the agreement as a product of Yaspan’s undue influence was untimely and without merit. We agree, and affirm the judgment.
FACTS AND PROCEDURAL HISTORY
In the 1980’s, Allyn and Joline bought a flat in London overlooking Hyde Park for approximately $200, 000, and put title to the property in the Wellington Trust (Trust).
In the early 1990’s, the Federal Deposit Insurance Corporation (FDIC) sought to collect $2 million from Allyn and three others who had guaranteed a loan made to a music school. Allyn hired Yaspan, an attorney, to represent him. The FDIC agreed to settle for $800, 000, with $200, 000 coming from
each guarantor, but Allyn did not have that amount available. Allyn’s accountant, who was also one of the guarantors, loaned Allyn the money, secured by a $210, 000 note interest in the flat (the Note). Yaspan continued to represented Allyn with respect to the FDIC through 1999.
In 1995, Allyn approached Yaspan with a business deal. Yaspan and his wife would become 50 percent co-owners of the Trust with Allyn and Joline; in exchange, the Yaspans would assume half of the Note and pay Allyn the equivalent of $200, 000. This proposal enabled the Fergusons to recover nearly all of their original purchase price for the flat and still own half of it. Both the Fergusons and the Yaspans wanted to be partners with each other and not each others’ children, so they agreed that whichever couple outlived the other would have the right to buy out the deceased couple’s interest in the Trust before that interest could pass to anyone else.
Recognizing the potential conflict of interest, Yaspan advised Allyn that he should hire independent counsel to advise him in drafting their tentative agreement. Allyn retained Keith Zimmet (Zimmet), who was an associate at the law firm of Lewitt, Hackman, Hoefflin, Shapiro, Marshall & Harlan (Lewitt Hackman). Yaspan had nothing to do with Allyn’s selection of Zimmet. Because Lewitt Hackman had represented Allyn’s accountant, who still owned the Note, the Fergusons waived the conflict between themselves and the accountant in writing.
Zimmet and Yaspan started negotiating. Yaspan prepared the initial draft. Over the next five months, Zimmet produced five more drafts, including the final draft.
All of the drafts, as well as the final agreement (Agreement), contained a “buy-out” provision: The substance of that provision remained the same in every draft, but the language used to effectuate it changed (and became increasingly “complicated”). In the first two drafts, paragraph 7.0 explained that “[i]n the event of the death of both of the FERGUSON’S [sic] or both of the YASPAN’S [sic] then the Trust shall buy out their interest at 50% of a deemed total value of $650, 000 [and] shall fund such buy-out with a 10-year... life insurance policy....” Later drafts relied on two different sections (§§ 11, 13) to provide that (1) the Trust would buy insurance and fund a $325, 000 payment upon the death of the second spouse of either couple (paragraph 11(d)), and (2) either couple had the right to buy the others’ share at $325, 000 if the property was to be “sold” or “transferred” (paragraph 13), which Yaspan opined might apply to testamentary transfers as well. The Agreement also contemplated the simultaneous execution of a Second Amendment to the Trust itself, which contained the buyout and right of first refusal terms and also made the trust irrevocable.
The parties signed the Agreement in September 1995. At that time, Allyn and Joline were 70 and 68 years old,  and Yaspan and his wife were 49 and 47. Because the Fergusons were represented by Zimmet, Yaspan did not explain to them the terms of the Agreement or its respective benefits and drawbacks. When Zimmet testified in 2013, he stated that he could not recall specifically what he told the Fergusons in 1995, but testified that he advised them regarding the Agreement and ensured they understood it before they signed it.
Neither couple took out the life insurance policies the Agreement contemplated. In 1999, Allyn and Yaspan asked the current trustee of the Trust to resign, and became cotrustees. That same year, Yaspan bought the Note. Some time thereafter, both the Fergusons and the Yaspans lost their copies of the signed Agreement, although the Fergusons did have copies of the initial and penultimate drafts. In 2004, the Fergusons retained a trust and estates lawyer who explained these drafts to them.
A year after Allyn passed away in 2010, Joline filed a petition and an amended petition for order rescinding second amendment seeking, among other things, rescission of the Agreement, “general damages, ” and accounting. Yaspan filed a competing petition to enforce the Agreement. The parties agreed to try the issue of the ...