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Placencia v. Strazicich

California Court of Appeals, Fourth District, Third Division

November 26, 2019

Stephanie A. PLACENCIA, as Cotrustee, etc., Plaintiff, Defendant and Respondent,
v.
Lisa M. STRAZICICH, as Cotrustee, etc., Plaintiff, Defendant and Appellant.

          [As Modified on Denial of Rehearing 12/23/2019]

          Appeal from a judgment of the Superior Court of Orange County, David L. Belz, Judge. Affirmed in part, reversed in part and remanded with directions. (Super. Ct. No. 30-2010-00356226)

          COUNSEL

         Bradley R. Kirk & Associates and Bradley R. Kirk, Irvine, for Plaintiff, Defendant and Appellant.

         Bidna & Keys, Richard D. Keys and Howard M. Bidna, Newport Beach, for Plaintiff, Defendant and Respondent.

          OPINION

         IKOLA, J.

Page 731

          Ralph Placencia died, leaving behind, among other things, a will, a trust, and a joint bank account with an express right of survivorship in favor of one of his daughters, appellant Lisa Strazicich. Prior to his death in 2009, Ralph left clear statements in his will that he did not want Lisa to have the right of survivorship; he wanted the proceeds of the account to go to his trust so it could benefit all three of his daughters.[1] After his death, Lisa refused to relinquish the funds, and both she and respondent Stephanie Placencia, another of Ralph’s daughters, both of whom were cotrustees of Ralph’s trust, filed petitions in the probate court in their capacity as trustees to determine the parties’ respective rights. The court determined that Ralph’s intent should prevail and ordered Lisa to account for the funds to the trust. Lisa appealed.

         This appeal turns on a close reading of Probate Code sections 5302 and 5303, part of the California Multiple-Party Accounts Law (Prob. Code, § 5100 et seq.; CAMPAL), which governs rights of survivorship in joint accounts.[2] Section 5302, subdivision (a), provides that a joint account entails a right of survivorship "unless there is clear and convincing evidence of a different intent." The commentary to that section makes clear that "the intention to negate survivorship may be shown to have existed after the time of creation of the account." (Cal. Law Revision Com. com., 53 West’s Ann. Prob. Code (2009 ed.) foll. § 5302, p. 61, italics added.) On the other hand, section 5303 provides that "rights of survivorship are determined by the form of the account at the death of a party." (Id., subd. (a), italics added.) "Once established, the terms of a multi-party account" including joint tenancies, "can be changed only by one of the following methods" (id., subd. (b), italics added), which generally require a party to file paperwork with the financial institution. (id., subd. (b)(2).) This case presents a difficult question: Ralph clearly expressed the intent to negate survivorship, but the form of the account included a right of survivorship, and Ralph did not employ one of the methods listed in section 5303 to change the terms of the account.

          We harmonize the two statutes by recognizing the explicit distinction drawn in CAMPAL between the actual ownership of the beneficial interests in the account, and the express terms of the account. The distinction allows the court to honor the clear intent of the person who established the account while at the same time offering protection to the financial institution which holds the depository account.

         The express terms of the account bear particular importance for the financial institution that holds the account: CAMPAL contains a safe harbor that immunizes a financial institution for payments it makes in compliance with the express terms of the account. Nonetheless, CAMPAL recognizes that the beneficial interests in the

Page 732

funds may differ from its express terms. Section 5302 concerns the rules to determine the beneficial interests in the account; section 5303 concerns the express terms of the account. Thus, we hold that the financial institution was correct to pay the funds to Lisa pursuant to the express terms of the account, but the beneficial owner of those funds was Ralph at the time of his death, and thus the funds became part of his estate.

         We also conclude the court properly relied on Ralph’s will as evidence of his intent, notwithstanding section 5302, subdivision (e), which provides that a right of survivorship "cannot be changed by will." That provision merely preserves the nonprobate quality of survivorship rights. The court may still look to the will as an expression of intent to negate survivorship.

          However, we reverse on two issues. First, the funds in the bank account were part of Ralph’s estate, to be distributed pursuant to his will, which has not been subject to a probate proceeding. It was error for the court to award those funds directly to the trust in the absence of a probate proceeding. Second, in light of that reversal, we remand for the trial court to reassess Stephanie’s attorney fees.

          FACTS

          In 1985, Ralph opened what the parties refer to as the Franklin Fund account with an initial deposit of $140,000. Lisa was listed as a co-owner. Lisa’s counsel states the paperwork submitted to open the account specifies that it is a joint account with right of survivorship, though the copy in the record is almost entirely illegible. Regardless, Stephanie stipulated that the account was opened as a joint tenancy with right of survivorship. Moreover, an account statement from 2009 addressed to Ralph and Lisa bore the acronym "JT WROS," which appears to stand for joint tenants with right of survivorship.

          Lisa, who was 23 years old at the time, had no involvement in opening the fund. Ralph told Lisa that he put her on the Franklin Fund, but never had any other discussion with her about it. Lisa never deposited money into the account, all of which, to Lisa’s knowledge, came from Ralph. Lisa never withdrew money from the account during Ralph’s lifetime. The account paid dividends, which Ralph took during his lifetime.

          Ralph passed away in December 2009. In the months leading up to his death, Ralph had a number of conversations with Henry Rivera, his brother-in-law, which resulted in Henry assisting Ralph to prepare a will and trust, which Ralph executed approximately 11 days before his death. His will left specific directions as to the Franklin Fund account: "Remove Lisa Strazicich as sole beneficiary of my Franklin Fund. I want the beneficiaries to be Lisa Strazicich, Stephanie A. Placencia and Tina R. Placencia, my three daughters. [¶] I want the Franklin Fund to be placed into my trust fund and then be used to pay off the mortgage of my home in Huntington Beach, CA." Henry confirmed that Ralph specifically made these requests in their conversations.

          The trust specified that the res would be distributed evenly between Ralph’s three daughters, Lisa, Stephanie, and Tina. It specifically disinherited his two sons (one of whom passed away). The trust named Lisa and Stephanie as successor cotrustees after Ralph’s death but specified that most important decisions would need Tina’s consent as well. At the time of Ralph’s death, the trust contained three properties located in California: a residence in Huntington Beach, raw land in Brea, and a residence in Long Beach. Collectively they were valued at approximately $2,215,000.

Page 733

          In January 2010, about a month after Ralph passed away, Lisa transferred the assets of the Franklin Fund account to an account in her name.

          In March 2010, Mark Zavala, one of Ralph’s sons, filed a petition seeking to invalidate the trust. Ultimately that petition was denied and the validity of the trust confirmed.

          Meanwhile, the sisters’ relationship grew contentious; they could not reach a consensus on the proper disposition of the trust assets. Lisa was performing most of the work administering the trust. Stephanie testified that she had not performed any role as trustee for the first four years after her father passed away. However, she was consulting with Lisa and Tina on major decisions related to the trust.

          In September 2014, Stephanie filed the first of the underlying petitions in her capacity as cotrustee of the trust. She sought an accounting, damages for breach of fiduciary duty, and to remove Lisa as trustee. In December 2014, Lisa filed a petition in her capacity as cotrustee, seeking, among other things, to remove Stephanie as cotrustee, to recover various costs and fees associated with her work administering the trust, and declaratory relief as to the status of the Franklin Fund account. By the time the petitions were filed, most ...


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