Judge: Jon R. Takasugi, Case: 20STCV23395, Date: 2022-09-16 Tentative Ruling

Case Number: 20STCV23395    Hearing Date: September 16, 2022    Dept: 17

SUPERIOR COURT OF CALIFORNIA 

COUNTY OF LOS ANGELES 

DEPARTMENT 17 

TENTATIVE RULING

Defendant Johnson’s demurrer as to the First and Second Cause of Action is SUSTAINED without leave to amend.

Procedural Background

On June 19, 2020, Plaintiff Tim Stordahl (hereinafter “Plaintiff”) filed his original complaint against Defendant Jerry Johnson, et al. (hereinafter “Defendant”).

On May 25, 2022, Plaintiff filed his Fourth Amended Complaint (“4AC”) alleging: (1) Breach of Fiduciary Duty, (2) Resulting Trust, and (3) Breach of Fiduciary Duty.

On June 27, 2022, Defendant filed a Demurrer to Plaintiff’s Fourth Amended Complaint requesting the Court to dismiss all claims against Defendant, and specifically demurring to Plaintiff’s First Cause of Action for  Breach of Fiduciary Duty and Second Cause of Action for Resulting Trust on the grounds that both allegations fail to state sufficient facts to constitute a cause of action under CCP §430.10 (e). Additionally, Defendant demurs to Plaintiff’s First Cause of Action for failure to establish the existence of a trust upon which his claims are based under Cal. Probate Code §15205(b)(1), and Plaintiff’s Second Cause of Action that this Court lacks jurisdiction over the asset at issue pursuant Cal. Probate Code §§11605, 117059(b) and CCP §430.10(a).

            On August 17, 2022, Plaintiff submitted his opposition.

            On September 8, 2022, Defendant submitted a reply.

            Summary of Events

            Plaintiff alleges that Decedent Michael D. Swoope (hereinafter “Decedent”) changed the beneficiary of several Wells Fargo Brokerage accounts from Decedent’s nephew, Richard Swoope, to Defendant Johnson. (4AC at ¶15). Plaintiff further alleges that the names on the subject Wells Fargo account are those of both Decedent Michael D. Swoope and Defendant Jerry Johnson, as joint tenants with right of survivorship or pay on death designation. (Id. at ¶16). Plaintiff believes that Decedent advised Defendant of the specific relatives and third parties to whom the Wells Fargo Accounts should be distributed, and that Plaintiff was an intended assignee and beneficiary of the funds within the account. (Id. at ¶21-24).

            Legal Standard 

 A demurrer for sufficiency tests whether the complaint states a cause of action.¿¿(Hahn v. Mirda¿(2007) 147 Cal.App.4th 740, 747 (Hahn).)¿¿When considering demurrers, courts read the allegations liberally and in context.¿¿(Taylor v. City of Los Angeles Dept. of Water and Power¿(2006) 144 Cal.App.4th 1216, 1228.)¿ In a demurrer proceeding, the defects must be apparent on the face of the pleading or via proper judicial notice.¿¿(Donabedian v. Mercury Ins. Co.¿(2004) 116 Cal.App.4th 968, 994.)¿ “A demurrer tests the pleadings alone and not the¿evidence or other extrinsic matters.¿ Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.”¿¿(SKF Farms v. Superior Court¿(1984) 153 Cal.App.3d 902, 905.)¿ “The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.”¿¿(Hahn, supra, 147 Cal.App.4th at p. 747.)¿ 

Discussion

I.           First & Second Causes of Action 

            First Cause of Action

            Defendant argues that Plaintiff’s first cause of action fails for three reasons: first, Plaintiff has failed to state facts sufficient to demonstrate that Defendant had a joint account with right of survivorship as a matter of law under Probate Code §5302. Second, that this court lacks jurisdiction as to the assets at issue herein due to the prior final distribution of those assets in a probate proceeding, pursuant to Cal. Probate Code §§11605, 11705(b) and CCP§430.10(a). Third, Plaintiff fails to alleges the necessary facts to establish existence of a trust upon which his claims are based under Cal. Probate Code §15205(b)(1).

            Jurisdictional Issues

            Plaintiff alleges that “Defendant Jerry Johnson Acted as the Executor in the Estate of Swoope.” (4AC, p. 7, ¶35). In the probate proceedings, the Inventory and Appraisal Reports listed assets of the Estate but did not include the disputed Wells Fargo Bank Accounts as probate assets. (Id. at page 8, ¶41-46). Additionally, the First and Final Report of the summary of probate proceedings did not include Wells Fargo Bank assets as part of the probate administration. (Id. at ¶49-510).

            If taken as alleged that the First and Final Report of the summary of the probate proceedings did not include the Wells Fargo Bank Assets, then the two remaining issues at hand are whether Plaintiff demonstrates that Defendant had a joint account with a right of survivorship as a matter of law under Probate Code §5302 and if Plaintiff alleges the necessary facts to establish the existence of a trust upon which is claims are based under Cal. Probate Code §15205(b)(1).

            Breach of Fiduciary Duty

            “A fiduciary relationship is ‘any relation existing between parties to a transaction wherein one of the parties is in duty bound to act with the utmost good faith for the benefit of the other party. Such a relation ordinarily arises where a confidence is reposed by one person in the integrity of another, and in such a relation the party in whom the confidence is reposed, if he voluntarily accepts or assumes to accept the confidence, can take no advantage from his acts relating to the interest of the other party without the latter’s knowledge or consent. . . .’ ” ’ ” (Wolf v. Superior Court (2003) 107 Cal.App.4th 25, 29 [130Cal.Rptr.2d 860], internal citations omitted.)

            In order for a fiduciary duty to be breached, a fiduciary relationship must first exist. Therefore, the existence of a relationship that would warrant a fiduciary relationship, such as the existence of a trust, must be established.

             In Plaintiff’s 4AC, Plaintiff  alleges that “Defendant Johnson was a close friend of Decedent Swoope and occupied a confidential/fiduciary relationship with respect to financial affairs of Decedent Swoope.” (4AC, ¶11).  Defendant Johnson acted as the Executor in the probate proceedings of Decedent Swoope, and Johnson was named as the Durable Power of Attorney by Decedent Swoope. (Id. at ¶12). Plaintiff asserts that Michael D. Swoope intended that Defendant Johnson and Does 1 through 10 should hold the funds in trust for the benefit of certain relatives and other third parties. (Id. at ¶19) . Plaintiff is the assignee of Richard Swoope by written assignment and Plaintiff is the proper Plaintiff (Id. at ¶23). Following the death of Michael D. Swoope, Defendants Johnson and Does 1 through 10 asserted that Johnson became the sole owner of such accounts and Johnson failed and refused to distribute the funds to the beneficiaries. (Id. at ¶24). Defendants, and each of them, wrongfully retained all funds in such jointly held Wells Fargo Brokerage account(s) from Plaintiff and other relatives and interested third parties. (Id. at ¶25). Plaintiff is entitled to relief in the form of a constructive trust remedy due to the breach of the fiduciary/confidential relationship imposed on defendants for the full amount of the Wells Fargo Brokerage accounts. (Id. at ¶27). Plaintiff is a grandson of Decedent Michael D. Swoope, and he is one of the individuals/parties for whom the funds were intended to be held in trust and to whom the funds were to be distributed. (Id. at ¶29).

            Here, while Plaintiff alleges the existence of a fiduciary relationship between the Decedent and Defendant, Plaintiff fails to allege a fiduciary relationship between Plaintiff and Defendant. Per the Court’s Minute Order issued on May 13, 2022, this Court found that per the settlement agreement, “Jerry Johnson will retain the funds that were held jointly with Jerry Johnson and Michael Swoope in the Wells Fargo Advisor’s Account.” (RJN, Exh. B.) That settlement agreement was approved by the court on 2/25/2020.

            Moreover, the petition for approval of settlement agreement stated:

            Pursuant to the terms of the settlement, I am to retain the funds that were held jointly by me and Mr. Swoope, in the Wells Fargo Advisor's Account, a 1966 Corvette in my possession, and I agreed to accept the sum of $100,000.00 to be paid to me from the estate. I also agreed to pay any statutory and extraordinary fees due to my attorney, David E. Simon, from this $100,000.00.

            Similar to Plaintiff’s allegations in his Third Amended Complaint, Plaintiff continues to argue the Accounts were outside of probate, and therefore, a trust warranting a fiduciary relationship between Plaintiff and Defendant could potentially exist. (4AC at page 8, ¶41-46).  However, this issue was discussed in the Court’s last Minute Order, where the Court clearly stated that “. . . the express language of the documents Plaintiff relies on in support seem to contradict this.” (Minute Order, 5/13/22). Specifically, facts appearing in exhibits control over contradictory allegations. (Kalnoki v. First American Trustee Servicing Solutions, LLC (2017) 8 Cal.App.5th 23, 38-39,  8 Cal.App.5th at p. 38-39.) Rather than explain why or how the Accounts are outside of probate despite their express inclusion in the settlement agreement, Plaintiff continues to provide repeated conclusory assertions that they are. At no point does Plaintiff’s opposition attempt to reconcile his assertion that the Accounts were outside of probate with the express language of the settlement agreement, and Plaintiff asserts that the settlement agreement excluded the Accounts from probate without any citation to a settlement provision.

            Per the Court’s instructions, Plaintiff was “. . . provided one final opportunity to allege facts which could show that the Accounts were not subject to probate.” (Minute Order, 5/13/2022).  However, based on Plaintiff’s Fourth Amended Complaint, Plaintiff states, “That Petition stated that Mr. Johnson would retain the "funds that were held jointly by one and Mr. Swoope in the Wells Fargo Advisor's Accounts, a 1996 Corvette..." (4AC at ¶48), but then makes the conclusory statement that “Those assets were not administrated within, or considered a part of the Estate of Swoope probate proceedings,” repeatedly underlining throughout the Fourth Amended Complaint that the accounts were not subject to probate administration, but not providing any citations to the settlement provision. (See generally, 4AC ¶ 57-65).

            Because Plaintiff has failed to provide any reference or evidence that the subject Wells Fargo Accounts were not subject to probate, Plaintiff has not alleged sufficient facts to establish the creation of a constructive trust. Absent the existence of a constructive trust, Defendant cannot have breached a fiduciary duty owed to Plaintiff, as a fiduciary relationship has not been established between Plaintiff and Defendant.

            Therefore, based on the foregoing, Defendant’s demurrer as to the First Cause of Action for Breach of Fiduciary Duty is SUSTAINED without leave to amend.

            Second Cause of Action  

            Defendant demurs to Plaintiff’s Second Cause of Action for Resulting Trust on the same grounds for which Defendant demurred to Plaintiff’s First Cause of Action.

            Because Plaintiff failed to establish the existence of a trust for Defendant to breach, subsequently, Plaintiff has also failed to plead sufficient facts to constitute a cause of action for “Resulting Trust.”

            Therefore, Defendant’s demurrer as to the Second Cause of Action for Resulting Trust is SUSTAINED without leave to amend.

It is so ordered.

Dated:  September    , 2022

   Hon. Jon R. Takasugi
   Judge of the Superior Court

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