Opinion ID: 1293069
Heading Depth: 1
Heading Rank: 5

Heading: Retroactive Application of Our Holding

Text: (5a) Respondent urges that because the present rule prohibiting unilateral severance of a joint tenancy in personal property is well established and a change in the law was not reasonably foreseeable, we should not give retroactive effect to our holding abrogating this rule. (6) Generally, judicial decisions are applied retroactively. ( Newman v. Emerson Radio Corp. (1989) 48 Cal.3d 973, 978 [258 Cal. Rptr. 592, 772 P.2d 1059].) This general principle is subject to two virtually universal exceptions, based on considerations of fairness and public policy. A decision announcing a change in a judicial rule of law is rarely, if ever, a basis for disturbing a final judgment based on the prior rule. ( Id. at p. 993; see In re Marriage of Brown (1976) 15 Cal.3d 838, 850-851 [126 Cal. Rptr. 633, 544 P.2d 561, 94 A.L.R.3d 164].) Nor will the new decision be applied to impair contracts made or property rights acquired in accordance with the prior rule. ( Moradi-Shalal v. Fireman's Fund Ins. Companies (1988) 46 Cal.3d 287, 305 [250 Cal. Rptr. 116, 758 P.2d 58]; Peterson v. Superior Court (1982) 31 Cal.3d 147, 151-152 [181 Cal. Rptr. 784, 642 P.2d 1305]; County of Los Angeles v. Faus (1957) 48 Cal.2d 672, 680-681 [312 P.2d 680].) Thus, our present holding would not be a basis for attacking a judgment that has become final before the finality of this decision and enforces a right of survivorship based on the now abrogated rule. Nor would our holding give rise to a claim on property that had already been transferred to a surviving party, in reliance on the prior rule, before this decision became final. Fairness and public policy may be the basis for additional exceptions to retroactivity. ( Newman v. Emerson Radio Corp., supra, 48 Cal.3d 973, 983; Moradi-Shalal v. Fireman's Fund Ins. Companies, supra, 46 Cal.3d 287, 305.) Considerations of public policy include the purpose of the new rule and the effect of retroactivity on the administration of justice. [4] The issue of fairness encompasses the extent of reliance on the old standards by the parties or others similarly situated, and the ability of litigants to foresee a change in the law. ( Peterson v. Superior Court, supra, 31 Cal.3d 147, 153; Neel v. Magana, Olney, Levy, Cathcart & Gelfand (1971) 6 Cal.3d 176, 193 [98 Cal. Rptr. 837, 491 P.2d 421].) (5b) The circumstance most strongly militating against full retroactivity of our present holding is its unforeseeability to counsel. This court's application of the former rule in 1932 ( In re Kessler, supra, 217 Cal. 32, 34-35), along with other appellate decisions, caused the former rule to be judicially characterized in 1936 as a rule of property that must be followed. ( Lagar v. Erickson, supra, 13 Cal. App.2d 365, 369 [conc. opn. of Marks, J.].) In 1937, this court described the rule as the recognized and established law of this state, [which] has been followed in numerous recent decisions. ( Harris II, supra, 9 Cal.2d at p. 655.) We reaffirmed the rule in 1948 ( Fish v. Security-First Nat. Bank, supra, 31 Cal.2d 378, 387), and it was thereafter reiterated in a number of decisions of the Courts of Appeal, two decided as recently as 1983 and 1984. (See Estate of Drucker, supra, 152 Cal. App.3d 509, 512; Estate of Zeisel, supra, 143 Cal. App.3d 516, 523-524.) The decision of the Court of Appeal in this case appears to be the first to criticize the rule as having originated in a misinterpretation of statements in Harris I. Offsetting this unforeseeability of our holding to the legal community is the likelihood that most individuals have conducted their affairs in reliance upon the principle we adopt today, rather than upon the rule mistakenly perceived in Harris I, which created an essentially indestructible right of survivorship in joint tenancy personal property contrary to the common law. Although the survivorship aspect of joint tenancy may well be the basis upon which a number of people place personal property in joint tenancy, which is sometimes referred to as the poor man's will, it is doubtful that many joint tenants know, or intend, that their personal property will be held in joint tenancy irrevocably unless there is a unanimous agreement by all joint tenants to sever. Thus, few, if any, persons in respondent's situation seem likely to have relied on the prior rule. Most joint tenancies in personal property are not created by attorneys or based on legal consultation and advice. The use of personal property joint tenancies, particularly in the context of bank accounts, is widespread; the rule of law regarding the right to survivorship is well known and is often the inducement for individuals to place their personal property in joint tenancy. The prior rule against unilateral severance, however, is probably unknown to the layperson. (See Note, Joint Tenancy: Character of Personal Property Acquired with Withdrawals from Joint Bank Accounts, supra, 28 Cal.L.Rev. 224, 226.) Nonetheless, there may be instances of persons who have incurred legal obligations or forgone substantial benefits in reasonable reliance, prior to this decision, upon the prior rule against unilateral severance. For example, a person may have contracted for an estate plan, or forgone an opportunity to purchase life insurance, in reliance on a lawyer's advice that personal property held by the person in joint tenancy could not be unilaterally severed by the other joint tenant. If a party claiming a right of survivorship proves such reliance, and further proves that application of the new rule instead of the prior rule would therefore cause the party substantial detriment, the right of survivorship may be enforced in accordance with the former rule. ( City of Berkeley v. Superior Court, supra, 26 Cal.3d 515, 533-534; Wellenkamp v. Bank of America (1978) 21 Cal.3d 943, 954 [148 Cal. Rptr. 379, 582 P.2d 970]; County of Los Angeles, v. Faus, supra, 48 Cal.2d 672, 681.) The resulting detriment must be substantial; mere disappointment of expectations is insufficient. ( Wellenkamp v. Bank of America, supra, 21 Cal.3d 943, 954; see Willard v. First Church of Christ, Scientist (1972) 7 Cal.3d 473, 478-479 [102 Cal. Rptr. 739, 498 P.2d 987].) Respondent now asserts that she and decedent in fact understood and relied on the prior rule in formulating their estate plan. Because the trial court applied the prior rule, respondent had no occasion to prove the reasonable reliance and substantial detriment sufficient to avoid application of our present holding. Accordingly, the cause must be remanded to afford respondent an opportunity to present such proof.