Judge Daniel S Belsky, Case 37-2023-00023094-PR-TR-CTL 2023-10-19 Tentative Ruling

Judge: Daniel S Belsky, Case: 37-2023-00023094-PR-TR-CTL, Date: 2023-10-19 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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CENTRAL COURTHOUSE TENTATIVE RULINGS - October 18, 2023

10/19/2023 02:00:00 PM 504 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Daniel S. Belsky

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Probate Trust Proceedings Demurrer / Motion to Strike (Probate) 37-2023-00023094-PR-TR-CTL IN THE MATTER OF THE DENNIS MOORE TRUST, DATED OCTOBER 22, 2015 CAUSAL DOCUMENT/DATE FILED: Demurrer, 08/03/2023

Pursuant to the Superior Court of San Diego County, Local Rules, rule 4.23.7, the court's tentative ruling is as follows: The Demurrer filed by Wells Fargo Clearing Services, LLC dba Wells Fargo Advisors, LLC is SUSTAINED without leave to amend.

The Motion to Strike is DENIED as moot.

I. Background This case concerns The Dennis Moore Trust dated October 22, 2015 ('Trust') and two retirement accounts maintained by Wells Fargo Clearing Services, LLC dba Wells Fargo Advisors, LLC ('WFA') (accounts ending 5681 and 6721).

On June 1, 2023, Phyllis Moore Quatman ('Petitioner'), as Trustee of the Trust filed a 'Verified Heggstad Petition to Declare that Property Held by Wells Fargo Advisors is a Trust Asset and Request for Damages and Attorney's Fees' ('Petition'). (ROA 1.) On August 3, 2023, WFA filed the instant demurrer and motion to strike. (ROA 6, 7). WFA demurs to the Petition pursuant to CCP §§ 430.10(e), 430.30(a) and 430.50(a), on the grounds that the Petition does not state facts sufficient to constitute any such causes of action against WFA.

WFA moves to strike certain parts of the Petition pursuant to CCP §§ 435(b)(1) and 436(a) on the grounds that any irrelevant, false, or improper matter inserted in any pleading may be struck. (ROA 6.) On August 11, 2023, Petitioner filed responses to these motions. (ROA 10, 11.) On October 12, 2023, WFA filed replies. (ROA 13, 14.) II. Discussion A. Compliance with the Rules of Court As a preliminary matter, the Court notes WFA's electronic exhibits fail to comply with CRC 3.1100(f)(4), which requires that unless submitted by a self-represented party, the electronic exhibits include Calendar No.: Event ID: TENTATIVE RULINGS

3006880 CASE NUMBER: CASE TITLE: IN THE MATTER OF THE DENNIS MOORE TRUST, DATED OCTOBER 37-2023-00023094-PR-TR-CTL electronic bookmarks with links to the first page of each exhibit, with bookmark titles identifying the exhibit number and briefly describing the exhibit. (See ROA 6, 7, Dellecker Decl., Exhs. 1-3.) Compliance with the Rules of Court is mandatory. The parties are expected to comply with all applicable rules in the future.

B. Demurrer A demurrer can be used only to challenge defects that appear on the face of the pleading under attack; or from matters outside the pleading that are judicially noticeable. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) A demurrer is treated 'as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. [Citation.] [Courts] also consider matters which may be judicially noticed.' (Serrano v. Priest (1971) 5 Cal.3d 584, 591.) No other extrinsic evidence can be considered (i.e., no 'speaking demurrers'). (Ion Equip. Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.) The complaint must be liberally construed and given a reasonable interpretation, with a view to substantial justice between the parties. (Amarel v. Connell (1988) 202 Cal.App.3d 137, 140–141; see also, Poseidon Development, Inc. v. Woodland Lane Estates, LLC, supra, 152 Cal.App.4th 1106, 1111-12 [in ruling on demurrers, courts treat as being true 'not only the complaint's material factual allegations, but also facts that may be implied or inferred from those expressly alleged'].) A complaint should provide defendants sufficient notice of the cause of action stated against them so that they are able to prepare their defense. (People ex rel. Dept. of Transportation v. Superior Court (1992) 5 Cal.App.4th 1480, 1486.) As a preliminary matter, the Court notes that while Part II of the Petition is entitled 'Damages Requested Under § 859 and Additional Civil Claims of Liability Authorized by § 855,' it is unclear from the pleadings whether the Petition states independent causes of action for: (1) bad faith taking, (2) breach of fiduciary duty, (3) constructive fraud, (4) fraud, and (5) financial elder abuse, or whether these allegations generally support the claim for damages under Probate Code § 859. (ROA 1, Pet. at p. 6.) WFA demurs specifically to the purported five causes of action on various grounds. (ROA 7, Notice of Demurrer at p. 1-2.) In response to the demurrer, Petitioner clarifies that the claim of bad faith is not a separately stated cause of action but supports the claim for damages under Probate Code § 859. (ROA 11, Response to Demurrer, at p. 4.) Petitioner further states that as to the remaining claims, she has standing to bring the Petition under Probate Code § 850 et seq. (Id.) Thus, the Court presumes the Petition alleges four civil claims in addition to the Heggstad Petition, and the allegations of bad faith conduct support the damages claim pursuant to Probate Code § 859.

1. Analysis a. Standing The trustee or any interested party may bring a petition for orders '[w]here the trustee has a claim to real or personal property, title to or possession of which is held by another.' (Prob. Code, § 850(a)(3)(B).) 'An action brought under this part may include claims, causes of action, or matters that are normally raised in a civil action to the extent that the matters are related factually to the subject matter of a petition filed under this part.' (Prob. Code, § 855, emphasis added.) 'If a court finds that a person has in bad faith wrongfully taken, concealed, or disposed of property belonging to ... a trust, or the estate of a decedent, or has taken, concealed, or disposed of the property by the use of undue influence in bad faith or through the commission of elder or dependent adult financial abuse, as defined in Section 15610.30 of the Welfare and Institutions Code, the person shall be liable for twice the value of the property recovered by an action under this part. In addition, except as otherwise required by law, including Section 15657.5 of the Welfare and Institutions Code, the person Calendar No.: Event ID: TENTATIVE RULINGS

3006880 CASE NUMBER: CASE TITLE: IN THE MATTER OF THE DENNIS MOORE TRUST, DATED OCTOBER 37-2023-00023094-PR-TR-CTL may, in the court's discretion, be liable for reasonable attorney's fees and costs. The remedies provided in this section shall be in addition to any other remedies available in law to a person authorized to bring an action pursuant to this part.' (Prob. Code, § 859.) WFA argues Petitioner lacks standing to bring the additional civil claims because she is not the interested party pursuant to CCP § 367. WFA further argues Petitioner cannot state these additional causes of action because they are not related to the subject matter of the Heggstad Petition, which is not meant to adjudicate claims against a third party.

Here, Petitioner filed the Heggstad Petition as Trustee of the Trust, which she is permitted to do under Probate Code § 850(a)(3). A petition brought under Probate Code § 850 may additionally assert claims 'normally raised in a civil action to the extent that the matters are related factually to the subject matter of a petition filed under this part.' (Prob. Code, § 855.) Further, a determination of bad faith in the taking, concealing, or disposing of trust property allows for double damages, in addition to attorney's fees and costs and any other remedy available in law. (Prob. Code, § 859.) WFA argues that Petitioner's purported five causes of action are not related to the subject matter of the Heggstad Petition. The Court disagrees. The Petition alleges that WFA failed to advise Decedent regarding the trust conversion forms, and failed to promptly process the trust conversion forms, which were submitted about a month prior to Decedent's death. The allegations regarding WFA's actions with respect to the handling of trust conversion documents forms the basis of the claims of bad faith, breach of fiduciary duty, constructive fraud, fraud, and financial elder abuse. (ROA 1, Pet. at ¶¶ 5, 6, and 13.) Therefore, the Court finds that Petitioner has standing to bring the additional civil claims pursuant to Probate Code § 855.

b. Sufficiency of Allegations The Petition alleges that Dennis Moore ('Decedent') created the Trust and contemporaneously created a Pour-Over Will to ensure that any assets left over would pour over into the Trust. (Id., at ¶ 1.) Prior to his death, Decedent attempted to transfer two retirement accounts held by WFA into the Trust by completing the trust conversion forms. (Id., at ¶ 5.) The forms were signed and mailed back to WFA on October 27, 2022. (Id., at ¶ 6.) Although the forms were correctly completed by Decedent, WFA dropped the ball and failed to process the forms promptly and honestly before his death. (Id., at ¶ 13.) Petitioner has requested that WFA transfer the assets to the Trust, but WFA has refused to do so and instructed Petitioner to file a Heggstad petition instead. (Id., at ¶ 35.) Under Part II of the Petition entitled 'Damages Requested Under § 859 and Additional Civil Claims of Liability Authorized by § 855,' the Petition alleges that WFA never mentioned to Decedent or Petitioner that Decedent needed to complete the trust conversion forms with his social security number for proper processing of the forms. (Id., at ¶ 38.) If the forms merely required Decedent's social security, Mr.

Dermody (one of the WFA advisors) should have filled it in. (Id., at ¶ 39.) The WFA advisors did not follow up during the three months after the forms were sent. (Id., at ¶ 40.) There was no error in the documents, and the claim that the documents are not in proper order is a legal fiction created to cover WFA's failure to explain to Decedent what was required and failure to process the documents. (Id., at ¶ 41.) On these allegations, the Petition fails to state sufficient facts to support claims for breach of fiduciary duty, fraud (constructive or otherwise), and financial elder abuse. In her response, Petitioner argues that WFA has not presented any evidence, but the demurrer tests the sufficiency of the pleadings and does not consider extrinsic evidence except those matters which are the proper subject of judicial notice. To survive demurrer, a petition must state enough facts to state a prima facie case for relief. The Petition here complains that the WFA advisors failed to do certain acts, but it is unclear how WFA is liable for their acts. Indeed, while the Petition refers to the elements for a claim of elder abuse as set forth in Welfare and Institutions Code § 15610.30(a)(1) ('Takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both'), Calendar No.: Event ID: TENTATIVE RULINGS

3006880 CASE NUMBER: CASE TITLE: IN THE MATTER OF THE DENNIS MOORE TRUST, DATED OCTOBER 37-2023-00023094-PR-TR-CTL the Petition does not plead factual allegations of fraud with sufficient particularity as required. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645 [In California, fraud must be pled specifically; general and conclusory allegations do not suffice and the policy of liberal construction of the pleadings will not ordinarily be invoked to sustain a pleading defective in any material respect.].) There are no allegations of wrongful use or intent to defraud. There are insufficient allegations regarding any fiduciary duty the WFA advisors legally owed Decedent and how any alleged breach caused damages to the Trust, aside from the general conclusory statement that damages are based on market fluctuations. To the extent Part III of the Petition consists of argument and conclusions of fact and law, the allegations under Part III cannot be admitted as true for purposes of the demurrer. Thus, the Court finds the Petition does not plead sufficient facts to support the additional civil causes of action raised in the Petition.

Further, liberally construing the pleadings, the Court finds that the Petition does not state sufficient facts to support the claim under Probate Code § 859 based on bad faith taking. At best, the allegations in the Petition plead negligence by the WFA advisors in failing to advise Decedent, in failing to process the forms promptly, and thereafter, delaying on their response to Petitioner's request to release the assets to the Trust. Indeed, there are no allegations going to 'taking' as the Petition states that WFA does not dispute that Decedent intended to place the retirement accounts in the Trust before his death, and WFA advised Petitioner to file the underlying Heggstad Petition.

Petitioner does not seek leave to amend the Petition. (Blank v. Kirwan, supra, 39 Cal.3d 311, 318 [The plaintiff bears the burden to show there is a reasonable possibility the defective pleading may be cured.].) Therefore, the demurrer is SUSTAINED without leave to amend as to the additional civil causes of action and claim for double damages.

The demurrer does not challenge the claims relating to the Heggstad Petition, which remains viable.

The Motion to Strike is DENIED as moot.

Counsel for WFA is directed to serve notice of this ruling in accordance with the provisions of CCP § 1019.5(a).

IT IS SO ORDERED.

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