Judge: John B. Scherling, Case: 37-2023-00019387-PR-OP-CTL, Date: 2023-09-29 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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CENTRAL COURTHOUSE TENTATIVE RULINGS - September 29, 2023

09/29/2023  02:00:00 PM  502 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:John B Scherling

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Probate  Other Probate Matter Motion Hearing (Probate) 37-2023-00019387-PR-OP-CTL IN THE MATTER OF THE DURABLE GENERAL POWER OF ATTORNEY OF ANITA H.

HADDAD DATED SEPTEMBER 12, 2020 [IMAGED] CAUSAL DOCUMENT/DATE FILED: Motion to Dismiss, 07/19/2023

Pursuant to Superior Court of San Diego County Local Rules, rule 4.23.7, the court's AMENDED tentative ruling is as follows: The Motion to Dismiss filed by Ronald Cozad, Respondent, is DENIED IN PART as to the accounting and GRANTED IN PART without prejudice as to the remaining claims.

Respondent's request for attorney's fees pursuant to Probate Code § 4545 is DENIED.

Respondent's Request for Judicial Notice (ROA 18) is GRANTED pursuant to Evidence Court § 452(d).

Notice is taken to the extent permitted. (Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564-1565 [While judicial notice of court records may be taken under Evidence Code § 452(d), the truth of matters asserted in such documents is not subject to judicial notice.].) On its own motion, the Court takes judicial notice of the entire record in the civil case pending in the North County Division of the Superior Court, in Morris et al. v. Cozad et al., Case No. 2023-2983, to the extent necessary to determine the procedural posture of this case as it pertains to an analysis under Probate Code § 4543.

I. Background This case involves the Haddad Family Trust and the Durable General Power of Attorney of Anita H.

Haddad dated September 12, 2020.

Anita Haddad ('Anita') and Walter Haddad ('Walter'), a married couple, established the Haddad Family Trust dated January 9, 1990, as amended and restated on August 27, 2018. Walter died on March 14, 2022.

Ronald Cozad, Agent under the Power of Attorney ('Respondent'), is Anita's son from a previous marriage.

Petitioners Tracie Morris and Scott Haddad (collectively 'Petitioners') are Anita's stepchildren and Walter's natural born children.

The Durable Power of Attorney was executed contemporaneously with the trust amendment in 2018, with both settlors' resignations as trustees of the Haddad Family Trust and the appointment of City National Bank as Successor Trustee of the Trust. Additionally, the settlors and all their children executed an 'Estate Planning Agreement' which provides, among other things, that Petitioner Tracie Morris and Calendar No.: Event ID:  TENTATIVE RULINGS

3004897 CASE NUMBER: CASE TITLE:  IN THE MATTER OF THE DURABLE GENERAL POWER OF ATTORNEY  37-2023-00019387-PR-OP-CTL Respondent each would be acting as Agents for Walter and Anita respectively.

On February 25, 2021, Respondent, as agent for Anita, filed a Petition for Instructions pursuant to Probate Code § 17200, in In re the Trust Created by Declaration of Trust Dated January 9, 1990 as Amended and Restated on August 27, 2018, known as the Haddad Family Trust, Case No. 2021-7957.

(ROA 1.) Petitioner Morris, as agent for Walter, filed a Cross-Petition for Instructions. (ROA 16.) Petitioners also filed a Petition for Construction of Trust Instrument and Instruction to Trustee to Distribute Certain Pecuniary Gifts from Trust (ROA 128.) The matters are pending before this Court.

On January 19, 2023, Petitioners, Erin Cipriani (Walter's daughter and beneficiary under the Haddad Family Trust), and Florence Cozad (Respondent's ex-wife and a beneficiary of the Haddad Family Trust) filed a civil complaint, as amended, in the North Division of this Court alleging: (1) Tortious Interference with Inheritance; (2) Lawyer's Aiding and Abetting of Tortious Interference with Inheritance; (3) Intentional Breach of Fiduciary Duties Imposed on Spouses with Respect to Community Property [Family Code sections 721, 1100 & 1101]; (4) Lawyer's Aiding and Abetting of Intentional Breach of Spousal Fiduciary Duties; (5) Lawyer's Negligent Interference with Inheritance; (6) Lawyer's Negligent Inducement of Anita Haddad's Breach of Spousal Fiduciary Duties; (7) Elder Abuse; (8) Invalidation of February 4, 2021 Will of Anita Haddad; (9) Invalidation of Anita Haddad's Exercise of Power of Appointment; and (10) Fraudulent Inducement of Mediation. (ROA 1, Morris et al. v. Cozad et al., Case no. 2023-2983; ROA 34, First Amended Complaint ['FAC'].) The first, third, fifth, sixth seventh, eighth, and ninth causes of action in the Complaint were alleged against Respondent as an individual. (ROA 34, FAC.) On July 13, 2023, the seventh and eighth causes of action (invalidation of Anita's 2021 Will and invalidation of Anita Exercise of Power of Appointment) were voluntarily dismissed without prejudice.

(ROA 128, Request for Dismissal filed Jul. 13, 2023.) Respondent, as well as the other defendants in the civil case, have demurred to the FAC and moved to strike certain portions of the FAC. These motions are set for a hearing on October 13, 2023. (ROA 161.) On May 5, 2023, Petitioners filed a Petition in the instant case for orders: (1) declaring that the authority of Ronald Cozad as Anita Haddad's attorney-in-fact is revoked; (2) compelling Ronald Cozad as attorney-in-fact to submit account for his acts to the court; (3) for surcharge and double damages; and (4) awarding attorneys' fees ('Petition'). (ROA 1.) The Petition was supplemented at ROA 6.

On July 19, 2023, Respondent filed a Motion to Dismiss the Petition. (ROA 16.) Respondent moves to dismiss the Petition pursuant to Probate Code § 4543 on the grounds that the Petition is not necessary for the protection of the interests of the principal, Anita, because it would not be in her best interests to remove Respondent, Anita's only son, as her POA (power of attorney). Respondent argues this Petition is merely the latest salvo in Petitioners' efforts to undermine their stepmother's property rights in the Haddad Family Trust and her right to defend herself via Respondent, her chosen agent.

In August 2023, the Court ordered the appointment of a Guardian Ad Litem ('GAL'), appointing attorney James Brown as Anita's GAL. (ROA 55.) Attorney Brown submitted Report of GAL Regarding ROA 1 and 16, wherein he states his position as GAL. (ROA 58, Report filed Sept. 6, 2023.) On September 19, 2023, Petitioners filed a late opposition. (ROA 60.) On September 21, 2023, Respondent filed a reply. (ROA 61.) II. Discussion A. Compliance with the Rules of Court As a preliminary matter, the Court notes that Petitioners' electronic exhibits fail to comply with CRC Calendar No.: Event ID:  TENTATIVE RULINGS

3004897 CASE NUMBER: CASE TITLE:  IN THE MATTER OF THE DURABLE GENERAL POWER OF ATTORNEY  37-2023-00019387-PR-OP-CTL 3.1110(f)(4) ('Unless they are submitted by a self-represented party, electronic exhibits must include electronic bookmarks with links to the first page of each exhibit and with bookmark titles that identify the exhibit number or letter and briefly describe the exhibit.') and with Local Rules, rule 4.3.2.A.4 ('Pleadings that contain more than one exhibit attached must include electronic bookmarks with links to the first page of each exhibit and titles that identify the exhibit number or letter and briefly describe the exhibit.'). (ROA 60.) Petitioners' untimely opposition fails to comply with CCP § 1005(b) and CRC 3.1300(a). (ROA 60.) Notwithstanding, the Court will consider the exhibits and opposition, finding no prejudice to the parties.

The parties are expected to comply with all applicable rules in the future.

B. Motion to Dismiss Respondent argues that during the trust amendment process in 2018, Respondent discovered that Walter claimed the bulk of the Trust property was his separate property, and a dispute arose over their assets. Anita and Respondent came to believe Walter failed to keep clear accounts sufficient to prove any separate property interest in the Trust assets, and that Walter increased the value of his separate accounts.

Respondent states that on September 12, 2020, Walter and Anita executed a Durable General Power of Attorney, each appointing a chosen agent to negotiate a resolution. Anita appointed Respondent, her son, and Walter appointed Petitioner Morris, his daughter. Respondent was granted an expansive durable power of attorney to manage Anita's affairs, and each of Walter's children consented to the arrangement.

Respondent claims that Walter and Petitioners continued to fight over Anita's community property interest in the Trust estate, and as a result, on February 5, 2021, Anita executed a new will naming Respondent as her sole heir and disinheriting Petitioners.

Respondent claims he has vigorously advocated on behalf of Anita in the related actions, and he is the only person looking after Anita's care. Anita is currently in hospice.

Respondent argues the Petition should be dismissed because Petitioners consented to his appointment as Anita's POA and are estopped from challenging the POA, the relief sought through the instant Petition will not serve Anita's interests, and the request for accounting and surcharge is improper.

In opposition, Petitioners argue there is no dispute that Anita lacks the capacity to presently revoke her POA. Petitioners have alleged that Respondent has been and is engaging in conduct that breaches his fiduciary duties to Anita in ways that are actively harming her, thereby making revocation in the best interest of both Anita and her estate. Petitioners argue that Respondent's violation of the Estate Planning Agreement and breach of Anita's fiduciary duties to Walter resulted in liability to Anita. Petitioner further argue Respondent also breached his duties by defaulting on his debt to Anita, hoarding surplus assets meant for her care, interfering with visitation from Anita's family, removing Anita from her home and neglecting her personal care and hygiene. These breaches warrant Respondent's removal in favor of a conservator, to protect both Anita's best interests, and her estate.

As to the request for accounting, Petitioners contend that Probate Code § 4541(c) authorizes the Court to compel an attorney-in-fact to account if the attorney-in-fact fails to submit a report or accounting within 60 days of a petitioner's request. Petitioners claim they requested an accounting from Respondent more than 60 days ago, and he has not provided an accounting or report. Respondent has indicated he would be willing to provide an accounting in the past, and there are concerns that Respondent may have made additional financial breaches that could be put to rest by means of an accounting. An accounting would further save the costs of discovery for all parties.

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3004897 CASE NUMBER: CASE TITLE:  IN THE MATTER OF THE DURABLE GENERAL POWER OF ATTORNEY  37-2023-00019387-PR-OP-CTL In reply, Respondent argues that Petitioners have failed to show Respondent breached any duties to Anita, and revoking the POA under the circumstances would not be in Anita's best interests. Respondent states he will cooperate with the GAL's efforts to obtain an accounting on behalf of Anita. Respondent also requests attorney's fees pursuant to Probate Code § 4545.

1. Analysis The Court may declare that the authority of an attorney-in-fact is revoked on a determination that: (1) the attorney-in-fact has violated or is unfit to perform the fiduciary duties under the power of attorney; (2) the principal lacks the capacity to give or revoke a power of attorney; and (3) the revocation of the attorney-in-fact's authority is in the best interest of the principal or the principal's estate. (Prob. Code, § 4541, subd. (d)(1)-(3).) 'The court may dismiss a petition if it appears that the proceeding is not reasonably necessary for the protection of the interests of the principal or the principal's estate and shall stay or dismiss the proceeding in whole or in part when required by Section 410.30 of the Code of Civil Procedure.' (Prob. Code, § 4543.) The Court is authorized to compel an attorney-in-fact to account if they fail to submit a report or accounting within 60 days of a petitioner's request. (Prob. Code, § 4541, subd. (c).) The Petition seeks to revoke Respondent's POA and to compel an accounting and for surcharge. The Petition alleges Respondent breached his fiduciary duties as Anita's attorney-in-fact on the following grounds: violating the Estate Planning Agreement and Anita's breach to Walter for failure to disclose Anita's 2021 Will, defaulting on the loan from Anita, hoarding the surplus assets, interfering with visitation from Anita's family, removing Anita from her home and neglecting her personal care and hygiene.

The GAL opines that these issues in the Petition are collateral to the issue of whether Respondent has breached his fiduciary duties to Anita in acting as her agent in matters related to handling her finances.

(ROA 58, Report of GAL at p. 2, ¶ 6.) The GAL further opines that the allegations in the Petition do not support the remedies sought in the Petition, and the failure to disclose the existence of the 2021 Will is going to be litigated in the civil action mentioned above. (Id.) The GAL notes that Respondent's declaration filed on September 6, 2023, 'provides facts and exhibits evidencing that no default has occurred.' (Id., at ¶ 7.) On September 1, 2023, the GAL also visited Anita at the senior living facility where she currently resides.

(Id., at ¶ 12.) The GAL states that Respondent's photos attached to his declaration filed on September 6, 2023, as Exhibit D, are 'an accurate depiction of Anita's room other than her television is larger and is not mounted on the wall.' (Id., at ¶ 13.) According to the GAL, 'at the time of [his] visit Anita appeared happy with her living situation and she made no complaints whatsoever. As noted, she spoke highly of her son, Ron, indicating he handles her affairs for her.' (Id., at ¶ 18.) The GAL also met and spoke with Loida Baskins, the Director of Memory Care at the facility regarding Anita's condition and care. (Id., at ¶ 19-21.) The GAL reports that '[a]s a result of [his] visit to Pacifica Senior Living, [his] meeting with Anita and [his] meeting with the Director of the Memory Care unit, all indications are that Anita is very well cared for and is evaluated by a medical professional every few weeks. Anita did not express any complaints about her living situation.' (Id., at ¶ 22.) Pursuant to Probate Code § 4541(d), the Court must determine whether: (1) Respondent has violated or is unfit to perform the fiduciary duties under the power of attorney; (2) Anita lacks the capacity to revoke the POA; and (3) the revocation is in the best interest of Anita or her estate.

Here, it is undisputed that Anita lacks capacity to revoke the POA, and the GAL's report confirms this.

Thus, the issues before the Court are whether Respondent has violated his fiduciary duties as Anita's attorney-in-fact or is unfit to serve in that role, and whether the revocation of the POA is in the best interest of Anita or her estate. In this regard, the Court considers whether the petition appears reasonably necessary for the protection of the interests of Anita or her estate.

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3004897 CASE NUMBER: CASE TITLE:  IN THE MATTER OF THE DURABLE GENERAL POWER OF ATTORNEY  37-2023-00019387-PR-OP-CTL The Court finds the Petition does not appear reasonably necessary to protect Anita's interests or the interests of her estate. The allegations in the Petition – focusing on the petition for instructions and matters relating to the 2021 will – even if accepted as true, do not support the relief sought (including revocation of the Power of Appointment) because the Petition does not allege any likely breaches of fiduciary duty by Respondent reasonably requiring revocation or related relief to protect the interests of Anita or her estate. As the GAL's report notes, the issues raised through the Petition appear collateral to the issue of whether Respondent breached his fiduciary duties to Anita while acting as her attorney-in-fact.

Moreover, the Petition and the civil complaint generally allege the same underlying course of alleged misconduct by Respondent. (See ROA 34 in Case No. 2023-2983, in particular the third and sixth causes of action in the amended civil complaint, based on breach of fiduciary duty and for elder abuse.) Although Petitioners are not explicitly seeking to revoke the Power of Attorney in the civil action, the issues are reasonably within the ambit of the civil action and potentially may be addressed in the civil action as well. (See California Powers of Attorney and Health Care Directives (Cal CEB), § 11.6(C) [if for example, 'there is a petition under [Probate Code] §850 to decide the effectiveness of a deed signed by the agent under a power of attorney and there is a civil action involving quiet title to that property and other related claims, the department hearing probate matters may dismiss the §850 petition.' (Sic.); and § 11.9.3 ['A probate court may order a petition dismissed if, for example, it is not reasonably necessary for the protection of the interests of the principal or patient or the principal's or patient's estate ... The order may include a determination that the matter should be resolved in an ordinary civil proceeding.'].) 'Notably, no provision under either the Power of Attorney Law ... or the Health Care Decisions Law ...

gives the court hearing these proceedings exclusive jurisdiction over issues within the scope of these two acts. ... Thus, there apparently would be no impediment to having a court in a general civil action find that a purported durable power of attorney had never been effective because the principal lacked capacity at the time of execution.' (California Powers of Attorney and Health Care Directives (Cal CEB), § 11.22.1) In any event, for the foregoing reasons, the allegations in the Petition do not reasonably establish the elements under Probate Code § 4541(d)(1) and (3).

Thus, the motion is GRANTED in part, as to the petition for revocation, and for surcharge and attorney's fees. Given the relatively recent filing of the instant case, however, the dismissal is, without prejudice.

As to the request for accounting, the motion is DENIED. The GAL determined that an accounting is appropriate and will be obtaining one from Respondent regardless of the outcome of this motion.

Respondent also states he will cooperate with the GAL to provide an accounting. The Court, therefore, exercises its discretion under Probate Code § 4541(c), and orders Respondent to provide an accounting to the GAL and a copy of the same to Petitioners.

As to attorney's fees under Probate Code § 4545, the request is not substantiated nor supported by any evidence, such as counsel's declaration. In a proceeding 'commenced by the filing of a petition by a person other than the attorney-in-fact, the court may in its discretion award reasonable attorney's fees to' the attorney-in-fact, 'if the court determines that the proceeding was commenced without any reasonable cause.' (Prob. Code, § 4545, subd. (a).) Given the partial denial of the motion, the Court cannot find the petition was filed without reasonable cause to award fees under § 4545. Therefore, the request for attorney's fees is DENIED.

Counsel for Respondent 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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