Filed 6/10/15 Estate of DeMotto CA2/8 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

Estate of BENJAMIN DEMOTTO, Deceased. B256695

PEGGY MITCHELL,

Petitioner and Respondent,

v.

MICHELE DEMOTTO et al.,

Objectors and Appellants. (Los Angeles County Super. Ct. No. BP150148)

APPEAL from a judgment of the Supe rior Court of Los Angeles County. David S. Cunningham III, Judge. Affirmed.

Skousen Law and Bob Skousen fo r Objectors and Appellants.

Law Office of Cary W. Goldstein, Cary W. Goldstein and Sarah C. Clark, for Petitioner and Respondent.

______________2 Appellants Michele DeMotto and Christophe r DeMotto are the adult daughter and son, respectively, of Benjamin De Motto, who died on August 31, 2013. 1 They appeal from an order appointing respondent Peggy M itchell, with whom DeMotto had been in a long-term romantic relationship, the admini strator of DeMotto’s estate. We affirm.

FACTUAL AND PROCED URAL BACKGROUND

On December 30, 2013, four months after DeMotto’s death, Mitchell brought a

Marvin action against DeMotto seeking damages a nd a constructive trust of assets held by appellants. 2 (Case No. BC531935.) The complaint alleged that DeMotto (who was estranged from his wife) and Mitchell (who was unmarried) met at the California Yacht Club in 2001 and began a romantic relations hip that lasted until his death in 2013. During that time, DeMotto suffered two stro kes. In 2006, DeMotto allegedly told Mitchell he had changed his mind about planni ng to marry her, but assured her she would be provided for in the event of his death. It was an assu rance DeMotto repeated multiple times over the ensuing years. But after De Motto died, Mitchell learned from DeMotto’s daughter that DeMotto had not provided for Mitchell in either his will or trust. Mitchell commenced the probate proceedings underlying this appeal on March 11, 2014, by filing a Petition for Letters of Admini stration of DeMotto’s estate. Attachment 3d to the petition states: “This Petition is file d only for the purpose of filing a Creditor’s Claim and expected litigation. There are no known assets in the probate.” Appellants did not file their own counter petition for issuance of letters, but in their contest to Mitchell’s petition, appellants characterized Mitchell’s Marvin action as “nothing more than an attempt of a gold-digge r to unjustly enrich he rself to the detriment

1 To avoid confusion, we refer to de cedent Benjamin DeMotto as DeMotto. We refer to his children, Michele and Chri stopher, collectively as appellants.

2 In Marvin v. Marvin (1976) 18 Cal.3d 660, 670–671 ( Marvin ), the California Supreme Court held that express or implied contracts between persons living together in a nonmarital relationship should be enforced , unless the contracts were explicitly founded on the consideration of mere tricious sexual services.3 of a no-asset estate.” Appellants argued M itchell should not be appointed administrator for three reasons: (1) The probate court la cked jurisdiction becau se the estate had no assets; (2) The public admini strator, rather than Mitchell, should be appointed because Mitchell was a creditor and the public administ rator has statutory priority over creditors in appointment (Prob. Code , § 8461, subds. (p) & (q)); 3 and (3) As a result of the Marvin action, Mitchell has a conflict of interest with the estate and benefi ciaries which renders her incapable of executing the duties of an administrator (§ 8502). In her reply, Mitchell explained that a condition precedent to maintaining her

Marvin action was a timely-filed claim against the estate, which required initiating probate proceedings; 4 a lack of tangible assets does no t preclude probate; as a creditor, she is statutorily eligible to be appointed administrator of the es tate; any person with a higher ranking under sec tion 8461 could file a competing petition for probate. Mitchell and appellants were represented by counsel at the April 11, 2014 hearing on the petition. After the probate court stat ed it was inclined to grant the petition, it asked if there was anything further. Appellant s’ counsel offered no response. An order

to show cause re final account wa s set for November 13, 2014. The order appointing respondent administra tor of decedent’s estate was filed on May 14, 2014. Letters of Administration were filed that same day. Appellants timely appealed.

3 All future undesignated statutory references are to the Probate Code.

4 A breach of contract action against the decedent falls within the definition of a “claim” against the estate. (§ 9000, subd. (a)(1).) Such action must be brought within one year of the date of death. (Code Civ. Proc., § 366.2, subd. (a); see also § 366.3 [promise of distribution from es tate].) But it may not be br ought unless a claim is first made to the personal representative of the estate and the claim is rejected in whole or in part. (§ 9351; see also Dobler v. Arluk Medical Center (2001) 89 Cal.App.4th 530, 536 [a claim against the estate is a condition preced ent to filing an action against the estate].) The ability of a creditor to initia te administration of the esta te compensates for the short limitations period. (See Dawes v. Rich (1997) 60 Cal.App.4th 24, 36, fn. 6. )4 DISCUSSION

A. The Probate Court Had Jurisdiction Even for a “No Asset” Estate

Appellants contend the probate court lack s jurisdiction because the petition states there are no assets in the estate. Appellants are incorrect. A decedent’s property is subject to admini stration under the Probate Code and is subject to the rights of beneficiaries and creditors, among others. (§ 7001.) Because probate proceedings are concerned with admi nistration of an estate, the existence of property to be administered is jurisdictional. (14 Witkin, Summary of Cal. Law (10th ed. 2005) Wills & Probate, § 352.) Although pe rhaps colloquially misunderstood, a debt is property for this purpose. ( Ibid [“The property may consist of an intangible such as a debt, or a cause of action for wrongful deat h of the decedent, where an administrator must be appointed to sue.”], citing Estate of Waits (1944) 23 Cal.2d 676, 680-681.) Our Supreme Court first stated over 100 years ago th at a claim against the estate is treated as property of the estate. ( Estate of Daughaday (1914) 168 Cal. 63, 70 ( Daughaday). ) The

court in Daughaday posited three types of proceedings th at theoretically could be utilized where the “the sole property of the estate is an equitable claim or demand,” against the estate. First, the probate court could trea t “such a claim as property, justifying the

issuance of letters in adva nce of its establishment.” 5 Or, the probate court could await the action of a court of equity in establishing the claim. Or, the probate court, “sitting as a court of equity, [could] itself try the c ontroversy” and grant or deny letters of administration depending on the determina tion of the validity of the claim. ( Daughaday

, at pp. 69-70.) It explicitly held that the first of these alternatives was the correct procedure, expressly rejecting the two other alternatives. “These considerations compel the conclusion that, in proper cases and upon a proper showing that the property of the

5 By “its establishment” we understand th e court to be saying “the establishment or proof of the claim.” In other words, the gr anting of letters where the only property of the estate was a debt would precede the act ual resolution of th e underlying debt.5 estate is an equitable claim, the court in probate should gran t letters of administration.” ( Ibid. ) 6

Under Daughaday, Mitchell’s Marvin action is a claim against the estate which justified issuance of letters of administration.

B. Appointment of the Public Administ rator Was Not Statutorily Required

Appellants contend it was error to appoi nt Mitchell rather than the public administrator. They argue the public administrator has stat utory priority over Mitchell,

who was a creditor of the estate. We find no error. Any interested person may commence proc eedings for administration of an estate by filing a petition seeking appointment of a personal representative. (§ 8000, subd. (a)(1).) A creditor is an “interested pe rson.” (§ 48, subd. (a)(1).) Appointment of an administrator (as opposed to executor or ad ministrator with will a ttached) is governed by Chapter 4, Article 4, co mmencing with section 8460. 7 Section 8461 identifies the persons entitled to be appointe d administrator in order of pr iority. As relevant here, children have priority over the public administrator, the public administrator has priority over creditors and creditors have priority ove r “any other person.” (See § 8461, subds.

6 Although the court refers to a clai m “in equity,” we do not read Daughaday’s holding as precluding the issuance of letters wh en the underlying claim is more properly characterized as one in law. The facts in Daughaday dealt with the effect prior probate proceedings in Kansas had on the probate in California. The Supreme Court went on to say that th e probate court has discretion to grant or refuse issuance of letters of administration in a “no asset” case. Appellants do not discuss the trial court’s exercise of discretion, excl usively arguing that the probate court had no jurisdiction at all to issue lette rs. Accordingly any argument th at the trial court abused its discretion in granting letters is waived. ( Mansell v. Board of Administration (1994) 30 Cal.App.4th 539, 545–546.) In any event, given the mandatory nature of the creditor’s claim process (Prob. Code, § 9351) a nd the statute of limitations for this type of claim (Code Civ. Proc., § 366.3), we find no abuse of discretion here.

7 Appointment of a personal representativ e is governed by Chapter 4, commencing with section 8400. Appointment of executor s is governed by Article 2, commencing with section 8420; appointment of ad ministrator with the will att ached (e.g. when the will does not name an executor) is governed by Ar ticle 3, commencing with section 8440.6 (b) [children], (p) [public ad ministrator], (q) [c reditors], (r) [any other person].) The Probate Court’s discretion is limited to appo inting the qualified person with the highest priority. ( Estate of Gibson (1963) 222 Cal.App.2d 299, 300- 301.) If there is more than one qualified person with the same priority, the probate court has discretion to select among such persons. (§ 8467.) The Probate Court may also appoint a pe rson nominated by a ny person entitled to appointment. (§ 8465, subd. (a).) A nominee “has priority next after those in the class of the person making the nomination.” (§ 8465, subd. (b).) For exam ple, because a child has priority over a grandchild, a child’s qua lified nominee has priority over a grandchild. Appointment of a personal representative is s ubject to contest. (§ 8004, subd. (a).) If the contestant asserts another person’ s right to appointment, the contestant must file a petition to have that ot her person appointed and the court must hear the two petitions together. (§ 8004, subd. (a).) Thus, if in response to an already filed petition someone else seeks appointment as personal representative or nomina tes a third person to so act, a separate petition must be filed. “If persons having priority fail to claim appointment as administrator, the court may appoint any pe rson who claims appointment.” (§ 8468; Estate of Selb (1949) 93 Cal.App.2d 788, 791 [public administra tor who does not apply for letters of administration is not entitled to prior ity].) It stands as a corollary to this rule that, if a contestant with priority fails to file a petition nominati ng another person, the court may appoint any qualified person who claims appointment. Here, Mitchell was the only party who filed a petition for letters of administration. Although appellants contested her appointment and advocated appointment of the public administrator instead, appellants did not file a competing petition. Citing their opposition papers filed with the trial court, appellants argue on appeal that they “nominated the public administrator in their objection to [Mitch ell’s] Petition.” That is simply not so. First of all, appellants did not “nominate” a nybody in their objections. What they did was to point out the statutory priority of appointment under section 8461 which gives priority to the public admini strator over creditors. But no one “nominated” the public administrator and neither the public administ rator nor appellants nor anyone else other7 than Mitchell filed the mandated petition for appointment. Secondly, appellants argue

that the court had discretion under section 84 66 to appoint someone in lieu of a creditor, such as the public administ rator. The only grounds asserted on appeal to support appellants’ argument that the court abused its discretion is the claimed conflict of interest

that Mitchell had. As we discuss in the next section, we find no abuse of discretion in that regard. In any event, ev en though the public administrator would have had priority

over Mitchell both as the nominee of the decede nt’s children (§ 8465, subd. (b)) and also by virtue of section 84 61, subdivision (p), the trial cour t did not err by failing to follow statutory priority when there was no alternative petition filed.

C. Mitchell Does Not Have an Incapa citating Conflict of Interest

Appellants contend it was an abuse of di scretion to appoint Mitchell because she

has a conflict of interest with the estate a nd the heirs and “ ‘asserted rights and performed acts hostile [to them].’ [Citati ons.]” They ar gue Mitchell’s Marvin action seeking $1,000,000 in damages against the estate and a constructive trust against appellants disqualifies her from appointment. We disagree. A person is not competent to act as personal representative (including administrator) if there are grounds for removing the person from office under section 8502, which provides: “A personal representative may be rem oved from office for any of the following

causes: (a) The personal representative has wasted , embezzled, mismanaged, or committed a fraud on the estate, or is about to do so. (b) The personal representative is incapable of properly executing the duties of the office or is otherwise not qualified for appointment as personal representative. (c) The personal representative has wrongfu lly neglected the estate, or has long neglected to perform any act as personal representative. (d) Removal is otherwise necessary for pr otection of the estate or interested persons. (e) Any other cause pr ovided by statute.”

A conflict of interest with the benefi ciaries does not disqualify a person from appointment as admi nistrator. (See Estate of Cole (1966) 240 Cal.App.2d 324, 3308 [“[A]n adversity of interest does not, in its elf, disqualify a person named in a will from serving as executor as there is no statute auth orizing disqualification on that ground.”].) Certainly, creditors are not automatica lly disqualified from acting as a personal representative merely because they have a cl aim against the estate, because “creditor” is one of the statutorily enumerated classe s of person entitled to serve as a personal representative. (§ 8461, subd . (q).) Every creditor arguably has an adverse interest to

some of the beneficiaries of an estate. And of course, mere appointment does not adjudicate the creditor’s claim in its favor. So Mitchell’s status as a creditor does not automatically disqualify her. The Court has the power to remove a creditor or any other person from acting as personal representative for the reas ons stated in section 8502. Estate of Effron (1981) 117 Cal.App.3d 915, 929, involved the remova l of an executor at the request of the

beneficiaries. The court observed: “ ‘The te st is probably whether th e conflict of interest

is with the estate itself rath er than with other persons who may be interested in the estate.’ [Citation.] The probate court, in examining the facts of a case, must decide

whether the circumstances warrant the remova l of an executor, and, except for clear abuse, the court’s ruling will not be interfered with on appeal.” ( Id . at p. 930.) The appellate court will interfere with the trial court’s exercise of discretion only upon a finding that “under all the evidence, view ed most favorably in sup port of the trial court’s action, no judge reasonably could have r eached the challenged result. [Citation.]” ( Estate of Hammer (1993) 19 Cal.App.4th 1621, 1634.)

The same rule on conflicts of interest should equally apply to the initial appointment of the personal representative as it does to his or her removal. Here, appellants have not demonstrat ed any abuse of discretion in appointing Mitchell personal representative, notwithstanding the pendency of her Marvin action

. Appellants’ reliance

on Estate of Hammer for a contrary result is misplaced. In Hammer, the court held the executor of a will who was enga ged in a bitter divorce from th e sole beneficiary should have been removed at the reque st of the beneficiary. The Hammer court chronicled the ways in which the executor had failed to perfo rm his statutory duties, mismanaged estate9 assets and breached his fiduciary duty to the beneficiary. ( Estate of Hammer, supra, 19 Cal.App.4th at pp. 1635 et seq.) In add ition, in the marital dissolution proceedings, the executor was asserting a cl aim adverse to the estate in that he was alleging the beneficiary made an oral gift to him of half of her multi-million dollar trust fund, from which she had personally paid $750,000 to a la w firm hired by the executor to maintain

an action on behalf of the es tate; the executor claimed he ha d a personal interest in the estate’s litigation against the law firm arisi ng out of his interest in the beneficiary’s separate trust fund.

The Hammer court observed: “In the instant case, we do not merely have the existence of a serious conflict of interest, but there is evidence, as acknowledged by the trial court, from which it coul d be concluded that the exec utor has explo ited his position

as executor to benefit his own selfish intere sts at the expense of the estate and the beneficiary. In other words, there is clea r evidence in this case from which it could be concluded that the executor had already ma de his ‘choice.’ [Citation.] Under all the circumstances of this case, the trial court ab used its discretion in failing to remove the executor on the ground of conflic t of interest arising out of unrelated litigation against the estate’s beneficiary.” ( Hammer , supra , 19 Cal.App.4th at p. 1 642.) No such facts exist here: Mitchell is simply a creditor, and the trial court di d not abuse its discretion in appointing her as personal representative.

DISPOSITION

The judgment is affirmed. Mitche ll shall recover her costs on appeal.

RUBIN, J. WE CONCUR:

BIGELOW, P. J. FLIER, J.