WISEMAN, J.
Appellant Judith Salwasser (Salwasser), trust beneficiary, appeals from a judgment (Code Civ. Proc., § 631.8) determining that her claim under Probate Code section 850 was barred by the one-year statute of limitations set forth in Code of Civil Procedure section 366.3.
Albert and Barbara Sauermilch owned an 80-acre grape farm on Temperance Avenue outside Fowler, California, and had three children: Salwasser, Carolyn Louise Sauermilch Black (Black), and respondent Jeffrey Sauermilch (Sauermilch). On January 3, 2001, Albert and Barbara executed the Albert Sauermilch and Barbara A. Sauermilch Revocable Living Trust Agreement (the trust agreement) and pour-over wills. Article Seventh of each will disinherited Salwasser.
The dispositive provisions of the trust agreement provided that Albert and Barbara, as trustors and original cotrustees, would have access to the entire principal and income of the trust during their joint lifetimes. Upon the death of one trustor, the trust agreement became "irrevocable" as to a portion of the trust estate and the surviving spouse had "no power to alter, amend or revoke the same." The trust agreement provided that the trust estate would be divided into Trust A (the surviving trustor's trust) and Trust B (the family trust). Trust A was designed to take advantage of the marital deduction under federal estate tax law, with the income and principal of the trust to benefit the surviving spouse. Trust B, the irrevocable portion of the trust estate, was designed to hold assets not allocated to Trust A, with net income and principal to benefit the surviving trustor.
The trust agreement further provided that, upon the death of the surviving trustor, the trustee would distribute one percent of the trust estate outright to Salwasser, the sum of $25,000 to Black, and the remainder of the trust estate outright in equal shares to Black and Sauermilch. The trust agreement further provided: "If either of Trustors' children fail to survive the last surviving Trustor for thirty (30) days, but leave issue then living, said share shall be distributed to such issue, by right of representation."
The trust agreement designated Black as cotrustee of the trust upon the resignation, incapacity, or death of either of the original cotrustees. The agreement directed that Black serve as sole trustee upon the resignation, incapacity, or death of both of the original cotrustees. The agreement further directed that Sauermilch serve as cotrustee, or sole trustee, upon the resignation, incapacity, or death of Black.
Barbara Sauermilch died on January 27, 2003, leaving Albert as sole trustee of the trust. Salwasser had been estranged from her family because of her relationship with Barbara. Salwasser testified, "My mom hated me ...." Upon Barbara's passing, Salwasser began visiting the family farm and spending time with Albert. Salwasser helped Albert with his laundry, grocery shopping, cooking, and other household duties, although Sauermilch had resided on the ranch for more than 20 years. Salwasser said her father was excited to see her, acknowledged he had treated her unfairly over the years, and said he was going to change.
At some point in 2003, Salwasser and Albert spoke in Black's presence. Albert said Salwasser would have an equal share of his property and Black was in agreement with his statement. At the end of 2003, Salwasser, Black, and Albert had a discussion about his need for live-in care. According to Salwasser, Black was concerned that Albert needed more help. At that time, Black had been fighting cancer for seven years and indicated she might eventually move from her home in Arizona back to the family farm. According to Salwasser, Salwasser agreed to give up her residence, move back to the family farm, and care for her father. In exchange, Albert and Black orally agreed that Salwasser would "get the ranch" upon Albert's death. According to Salwasser, Albert and Black said they would contact an attorney to have papers drawn.
At the very end of 2003, Salwasser moved in with Albert and helped him, but she also continued her work as a hairdresser in Fresno. Beginning in 2004, Salwasser bought food and supplies for the farmhouse, helped pay Albert's Pacific Gas & Electric bill, and occasionally gave him money for cigarettes. Black helped Albert with other bills. Between 2003 and 2005, Black would visit from Arizona every couple of months. Salwasser, Black, and Albert spoke about things that needed to be done. Albert agreed with Black, but they never specified the type of paperwork they were contemplating. During that same period of time, Salwasser spent less time at her hairdressing job and more time caring for Albert.
In 2005, Black's cancer was getting worse and she moved back to the family farm in May of that year. Before she moved in, she discussed some compensation for Salwasser. Black said Albert was giving Black a $25,000 gift in the trust agreement, and Black wanted Salwasser to have that sum as compensation "for all that [Salwasser] did for [Black] and dad." Although Black had a son, Salwasser said the son had been in trouble his whole life and was in prison.
At the time Black moved back to the farm, Albert's condition had not changed drastically. However, Albert had a hard time accepting Black's illness and he became depressed. According to Salwasser, Albert said many times he was glad that she was there to help Black and him. A notation on Salwasser's July 25, 2005, day book read: "`[Black] and I talked to dad about going to attorney and changing the papers. Dad said it needed to be done.'" A similar notation appeared on the day book page for August 3, 2005. Salwasser believed that Black and Albert had consulted their attorney sometime between July 27 and August 3, 2005, and had changed the paperwork to give Salwasser a share. During the last half of 2005, Salwasser cut down her hairdressing work "quite a bit" because she needed to care for Albert and Black. Black's condition deteriorated in 2006 and Albert's condition was fairly good until he fell out of a mulberry tree that he was trimming in late fall. He was hospitalized for several days, ordered to wear a brace, walked with a walker, and kept getting pneumonia. According to Salwasser, the fall from the tree "had really done him in quite a bit."
Salwasser said attorney Gerald Tahajian visited the family farm a few weeks before Albert and Black passed away in April 2007. Tahajian presented a durable power of attorney for Black to sign. Salwasser advised Tahajian "that we needed to set up a time for him to draw up [Black's] will, because of the fact that she wanted me to have her share. She wanted to make sure that her son was provided for, and what she wanted him to have ...." According to Salwasser, Tahajian said he could prepare such a document. Salwasser also told Tahajian that she, Albert, and Black had discussed her father's estate planning documents. According to Salwasser, Tahajian agreed the changes to Albert's documents needed to be completed as soon as possible and that "it would cost $1,500 and he would need the money up front."
Albert died on April 4, 2007, and Black died on April 20, 2007. At the time of Black's death, the estate planning documents had not been amended to leave Salwasser a share of the trust estate. According to Salwasser, Albert and Black contemplated that Salwasser would care for them until their deaths. Salwasser said her father stated at one point that "the ranch will be yours when I'm gone," and Black was "in total agreement with it ...." Salwasser acknowledged that Albert never signed a deed, will, or trust to give her a share of the trust estate.
One week after Black's death, Salwasser spoke with Tahajian, Albert's attorney. Tahajian informed Salwasser that Albert had never changed his estate plan and that she was to get one percent of the trust estate under the existing trust agreement. Salwasser never filed a claim against Albert's estate for services rendered or performed. Salwasser was never aware of a probate proceeding for Black's estate and never filed a creditor claim. In May 2008, Salwasser spoke with Black's administrator, her niece, Janet Daggs Conover (Conover). Conover said she had spoken with Tahajian. Conover said, "I should be accommodated by, you know, a settlement. I should be getting some kind of a settlement out of it." According to Salwasser, Conover was referring to both Black's estate and Albert's estate. Conover never advised Salwasser about probate proceedings relating to Black's estate and never supplied her with any forms or documents.
Salwasser's counsel, Gordon Panzak, testified on behalf of his client. Panzak said he spoke with Conover on August 7, 12, and 13, 2008, and that Conover acknowledged that Salwasser was entitled to the $25,000 due Black under the trust agreement. On October 16, 2008, Panzak said Conover again "admitted ... Salwasser was due the $25,000 claimed in the 850 petition ...."
Sauermilch testified he took the original trust agreement from his father's house after the latter's death. He did not publish a notice to creditors. He prepared and filed an accounting with Tahajian but did not give Salwasser a copy of the accounting or a copy of the trust agreement.
The court ruled:
On August 11, 2008, Salwasser filed in superior court a verified petition by claimant to determine ownership of trust property (Prob. Code, § 850, subd. (a)(3)(A)). Salwasser sought imposition of a constructive trust and an order directing the trustee to transfer trust property to Salwasser.
Conover, as administrator of Black's estate, on October 15, 2008, filed a verified response to the petition and prayed for a denial of all of Salwasser's claims, aside from payment of a specific $25,000 bequest.
On October 16, 2008, Sauermilch filed a verified answer admitting and denying the material allegations of the petition and setting forth four affirmative defenses. Later, Sauermilch moved to amend the answer to add the affirmative defense of the statute of limitations (Code Civ. Proc., §§ 366.2, 366.3).
Shortly before trial, Conover filed a motion for judgment on the pleadings, joined by Sauermilch, which was opposed by Salwasser.
Conover moved in limine to request dismissal of Salwasser's petition for failure to state a cause of action. On June 30, 2009, Mark J. Snauffer, judge of the superior court, conducted a contested hearing on the motion and took the matter under submission. The court filed and entered judgment on September 15, 2009 (Code Civ. Proc., § 631.8), finding that Salwasser's petition was barred by the statute of limitations (Code Civ. Proc., § 366.3) and awarding costs to respondents. A timely appeal by Salwasser followed.
On July 27, 2010, Sauermilch filed a motion to dismiss Salwasser's appeal on the grounds it was meritless; that Salwasser failed to provide a record affirmatively demonstrating error; and that Salwasser's arguments relied on case law predating the statute of limitations cited by the trial court in granting the motion for judgment. Sauermilch also moved for sanctions (Cal. Rules of Court, rule 8.276) on the grounds the appeal was frivolous and failed to comply with applicable rules of appellate procedure.
On September 2, 2010, we filed an order deferring a ruling on the motion to dismiss. Our order granted Salwasser leave to file a reply stating: "This court is considering imposing sanctions pursuant to request of respondent."
We affirm the judgment, and deny Sauermilch's request to dismiss the appeal and for sanctions.
Salwasser contends she formed quid pro quo contracts with her father and sister before their deaths. She argues that, upon the deaths of her father and sister, the real property and $25,000 gift became impressed with an involuntary equitable trust created by operation of law, and that the correct statute of limitations is a period of two years from the repudiation of the underlying contracts. She submits the trial court erred in applying the one-year statute of limitations in Code of Civil Procedure section 366.3.
Code of Civil Procedure section 366.3, subdivision (a), states:
"The underlying legislative history states section 366.3 `[e]stablishes a one-year statute of limitations for claims which arise from a promise or agreement with a decedent to a distribution from an estate or trust, or under another legal instrument. It also generally prohibits any tolling or extension of this limitations period, and applies this provision prospectively.' (Assem. Floor Analysis, Concurrence in Sen. Amends., Assem. Bill No. 1491 (1999-2000 Reg. Sess.) as amended Apr. 4, 2000, pp. 1-2, italics added.)" (Stewart v. Seward (2007) 148 Cal.App.4th 1513, 1520.)
The intent of section 366.3 is to reach any action predicated upon the decedent's agreement to distribute estate or trust property in a specified manner. The statute is not limited by its terms to contract claims. Rather, it extends to any claim that arises from the decedent's promise or agreement. The statute applies to all actions predicated on a decedent's promise to make specified distributions upon his or her death. (Ferraro v. Camarlinghi (2008) 161 Cal.App.4th 509, 555.)
Salwasser contends that (1) oral contracts conveying real and personal property are specifically enforceable in equity; (2) a court of equity may use a constructive trust as a remedy to compel a person to transfer property to which he or she is not justly entitled; (3) an action to establish a constructive trust is subject to the limitations period of the underlying substantive right; (4) the two-year statute of limitations governing oral contracts (Code Civ. Proc., § 339.1) was the applicable statute in this case; (5) a statute of limitations is subject to estoppel where the inequitable conduct is omissive in nature; (6) the trial court erroneously characterized Salwasser's action as one based upon an agreement to make a will or trust rather than a "
Probate Code section 850 states:
Salwasser's August 11, 2008, petition under Probate Code section 850 alleged:
Among other things, Salwasser prayed for imposition of a constructive trust upon the Sauermilch farm and upon the specific $25,000 gift.
The statute of limitations to be applied is determined by the nature of the right sued upon and not by the form of the action or the relief demanded. A constructive trust is not a substantive device but simply a remedy to compel a person not justly entitled to property to transfer it to another person who is entitled to the property. An action seeking to establish a constructive trust is subject to the limitation period of the underlying substantive right. If that substantive right is barred by the statute of limitations, then the remedy necessarily fails. (Davies v. Krasna (1975) 14 Cal.3d 502, 515-516.)
To determine the statute of limitations that applies to a cause of action, it is necessary to identify the "gravamen" or nature of the cause of action. The nature of the right sued upon—not the form of action or the relief demanded—determines the applicability of the statute of limitations. What is significant for statute of limitations purposes is the primary interest invaded by the defendant's allegedly wrongful conduct. (Marin Healthcare Dist. v. Sutter Health (2002) 103 Cal.App.4th 861, 875; Hensler v. City of Glendale (1994) 8 Cal.4th 1, 22-23.) The caption, form, and prayer of the complaint will not conclusively determine the nature of the liability from which the cause of action flows. (Rivas v. Safety-Kleen Corp. (2002) 98 Cal.App.4th 218, 229.)
Salwasser is seeking enforcement of "a promise or agreement with a decedent to distribution from an estate or trust or under another instrument, whether the promise or agreement was made orally or in writing ...." (Code Civ. Proc., § 366.3, subd. (a).) To preserve her claim, Salwasser attempts to point this court to the general two-year statute of limitations governing oral contracts (Code Civ. Proc., § 339, subd. 1) and the three-year statute of limitations for discovery of fraud (Code Civ. Proc., § 338, subd. (d)). This argument, however, overlooks the language of section 366.3, subdivision (a), which, as we have already discussed, states: "If a person has a claim that arises from a promise or agreement with a decedent to distribution from an estate or trust ... an action to enforce the claim to distribution may be commenced within one year after the date of death, and the limitations period that would have been applicable does not apply." (Italics added.) Thus, Salwasser's reliance on the more generalized statutes of limitation does not support reversal of the judgment.
Salwasser insists the statute of limitations can be estopped. The function of estoppel is not to punish but to relieve one party from the harm caused by another's inequitable conduct. It seeks to restore a balance of rights and responsibilities in a situation that has become unbalanced due to one party's unfair conduct. Inequitable conduct alone will not sustain an estoppel. Instead, it must appear that the conduct of the party to be estopped caused the party seeking the estoppel to suffer some harm, disadvantage, or change of position. The harm, disadvantage, or change of position must be of sufficient gravity to justify the intervention of equity. In the case of affirmative representations, this will usually translate into detrimental reliance by the person to whom the representations were made. Where the inequitable conduct is omissive in nature, the law will not invariably require reliance. One cannot "rely on" another's obstructionism or recalcitrance. Nevertheless, such conduct can give rise to estoppel where it causes harm to another. (City of Hollister v. Monterey Ins. Co. (2008) 165 Cal.App.4th 455, 500, 513.)
Equitable estoppel is not concerned with the running and suspension of the limitations period. Rather, it comes into play after the limitations period has run and addresses the circumstances in which a party will be estopped from asserting the statute of limitations as a defense to an admittedly untimely action because his or her conduct has induced another into not suing within the applicable limitations period. Application of equitable estoppel is independent of the limitations period itself and is drawn from the equitable principle that no person will be permitted to profit from his or her own wrongdoing in a court of justice. Equitable estoppel operates directly on the defendant without abrogating the running of the limitations period as provided by statute. Consequently, it may apply no matter how unequivocally the applicable limitations period is expressed. (Battuello v. Battuello (1998) 64 Cal.App.4th 842, 847-848.)
Invoking these principles, Salwasser argues, "JEFFREY SAUERMILCH's testimony establishes that no actions normally taken in the furtherance of the administration of a Trust were taken in this case. A reasonable inference is that deliberately or otherwise, JUDITH SALWASSER was kept in the dark as to Trust Administration. The record contains no evidence that JEFFREY SAUERMILCH, as Successor Trustee[,] ever repudiated the prior contract between ALBERT and JUDITH.... [¶] ... [¶] JEFFREY SAUERMILCH's omissive conduct in not telling JUDITH SALWASSER whether or not he would honor the contract and convey title to her and/or his failure to repudiate the contract should give rise to estoppel as to the assertion of Bar."
The legislative history of Code of Civil Procedure section 366.3 provides that, "`[t]his bill establishes the statute of limitations to file a claim for distribution of an estate under any instrument or an equitable estoppel theory as one year from the date of decedent's death, which may not be tolled except for a "no contest" action.'" (Stewart v. Seward, supra, 148 Cal.App.4th at pp. 1523-1524, quoting Sen. Rules Com., Off. f Sen. Floor Analyses, 3d reading analysis of Assem. Bill No. 1491 (1999-2000 Reg. Sess.) as amended Apr. 4, 2000, p. 3, italics added.)
In light of Stewart, we conclude that Sauermilch was not equitably estopped to assert the one-year limitations period of Code of Civil Procedure section 366.3.
Sauermilch contends the appeal should be dismissed because "it is totally and complete[ly] without merit." He further contends we should impose sanctions against Salwasser "[t]o discourage further frivolous appeals and to compensate for the loss that results from the delay."
"When it appears to the reviewing court that the appeal was frivolous or taken solely for delay, it may add to the costs on appeal such damages as may be just." (Code Civ. Proc. § 907.) "On motion of a party or its own motion, a Court of Appeal may impose sanctions, including the award or denial of costs under [California Rules of Court,] rule 8.278, on a party or an attorney for: [¶] (1) Taking a frivolous appeal or appealing solely to cause delay; [¶] ... [¶] (3) ... or [¶] (4) Committing any other unreasonable violation of these rules." (Cal. Rules of Court, rule 8.276.)
In In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650, the California Supreme Court held that "an appeal should be held to be frivolous only when it is prosecuted for an improper motive—to harass the respondent or delay the effect of an adverse judgment—or when it indisputably has no merit—when any reasonable attorney would agree that the appeal is totally and completely without merit. [Citation.] [¶] However, any definition must be read so as to avoid a serious chilling effect on the assertion of litigants' rights on appeal. Counsel and their clients have a right to present issues that are arguably correct, even if it is extremely unlikely that they will win on appeal. An appeal that is simply without merit is not by definition frivolous and should not incur sanctions."
"Sanctions are to be `used most sparingly to deter only the most egregious conduct.' [Citation.] Further, `[a]n appeal, though unsuccessful, should not be penalized as frivolous if it presents a unique issue which is not indisputably without merit, or involves facts which are not amenable to easy analysis in terms of existing law, or makes a reasoned argument for the extension, modification, or reversal of existing law. [Citation.]' [Citation.]" (Dodge, Warren & Peters Ins. Services, Inc. v. Riley (2003) 105 Cal.App.4th 1414, 1422.)
Here, we glean no evidence of improper motive from the pleadings. Moreover, Salwasser's counsel has made a reasoned, although ultimately unsuccessful, argument for the modification or reversal of existing law. We cannot say this appeal lacks merit.
The judgment is affirmed; the motion to dismiss and request for sanctions are denied. Costs are awarded to respondent.
WE CONCUR:
Hill, P.J.
Kane, J.
