Court Opinion

ID: 4570961
Source: CourtListenerOpinion
Date Created: 2020-09-29 21:02:20.990899+00
Date Added: 2024-06-11T13:30:59.193301
License: Public Domain

Filed 9/29/20 Estate of Clark CA1/5

       NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for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

                         FIRST APPELLATE DISTRICT

                                    DIVISION FIVE

 Estate of DAMON CLARK,
 Deceased.

 ELIZABETH SCHNEIDER
 CLARK,
                                                      A159182
       Petitioner and Appellant,
 v.                                                   (Alameda County
                                                      Super. Ct. No. RP17881782)
 SUSAN RADELT,
       Objector and Respondent.

        Damon Clark (Damon)1 died an untimely death in
September 2017 at the age of 39. He left a will in which he
bequeathed his three rental properties to his wife, appellant
Elizabeth Schneider Clark (Elizabeth) and granted his mother,
respondent Susan Radelt (Susan) “a life estate of either (1)
residency rent-free in the smallest of my real properties, or (2)
the rental income of the property of up to the sum of two
thousand dollars ($2,000.00).” The trial court issued an order

       We use the parties’ first names not from disrespect, but to
        1

ease the reader’s task.

                                                1
requiring the disputed language to be interpreted as “anything
any other tenant of the apartment would be expected to pay as
rent to the landlord,” with a cap of $2,000 per month.
      The parties agree the will gives Susan the right to live
rent-free in the smallest unit Damon owned at the time of his
death, located on the Sonoma Highway in Sonoma. But they
disagree about whether the term “rental income” if she elects to
live elsewhere refers to the gross or the net amount of the rent,
whether the $2,000 cap should apply on an annual or monthly
basis, and whether Susan is entitled to the fair market rental
value of the property even when it is not in fact rented out. We
agree with Elizabeth that “rental income” is limited to actual
income but affirm the court’s order requiring her to pay gross
rents, with a cap of $2,000 per month.
                         I. BACKGROUND
      Damon struggled with drug addiction over the course of his
life. He spent some of his teens and early twenties in the custody
of juvenile hall and then prison. Despite this, he was able to stay
clean and sober for stretches of time. He married his first wife,
Kelly Clark (Kelly), obtained his general contractor’s license, and
acquired several rental properties. This included a complex of
four units on Sonoma Highway, the smallest of which had rented
for $1200 per month.
      In late 2014, Damon and Kelly separated, and he became
romantically involved with Elizabeth, who was his high school
sweetheart and longtime friend. They began trying to have a
baby together and planned on getting married. Because Damon

                                 2
was still married to Kelly, he was concerned that if he died
without a will, his property would pass intestate to her instead of
to Elizabeth and their unborn child. Using a template pulled
from the Internet, he drafted a will.
      Damon sometimes had a difficult relationship with his
mother, Susan. He believed her to be financially irresponsible
and was concerned about her inability to handle money.
Ultimately, Damon decided to include a gift for Susan in his will
to ensure that she had housing. He wanted to give her the
chance to live rent-free in the smallest of the apartments he
owned,2 but recognized she might decide to live somewhere else.
He devised a gift where she could elect to either live in one of his
apartments or take the income from that apartment to secure
housing elsewhere.
      In September 2015, Damon signed a final version of the
will that left most of his property to Elizabeth, made her the
executor, and included monetary gifts to his niece and sister. It
also included paragraph 1.b., which provided, “To Susan Radelt of
Fairfax, California, I give a life estate of either (1) residency rent-
free in the smallest of my real properties, or (2) the rental income
of that property of up to the sum of two thousand dollars
($2,000.00).”
      In 2016, Damon had an email exchange with Susan in
which he expressed frustration with her inability to manage

      2Damon and Kelly owned several properties together.
Because their divorce was not yet final when he drafted his will,
he did not yet know which properties would be awarded to him
and which would be the smallest property he owned.

                                   3
money. He offered to supplement her monthly income by $300,
subject to certain conditions that included making him the
trustee of her social security and retirement income payments,
signing up for senior housing lists and public assistance, and not
asking him for more money. Damon did not end up providing the
$300 per month.
      Damon and Elizabeth married, and their daughter was
born in early 2017. Damon died in September 2017 from an
overdose of opiates.
      A dispute arose between Elizabeth and Susan over the
distribution of Damon’s estate. Elizabeth, as executor of the
estate, filed a “Petition for Determination of Entitlement to
Estate Distribution.” The petition alleged, “[Elizabeth] contends
Damon intended to give [Susan] the right to live in the smallest
unit of one of his properties without any obligation on her part to
pay any of the expenses of the property. Alternatively, if [Susan]
chose not to live in such unit, Damon intended that she receive
the net monthly income from that unit, up to a maximum [of]
$2,000 per month. [Elizabeth] therefore seeks an order
confirming this as [Damon’s] intention and determining how
[Damon’s] estate will be distributed under Article THREE,
Paragraph 1.b of [Damon’s] will.”
      The trial court held a hearing and heard extrinsic evidence
regarding Damon’s intent when drafting his will, consisting of
testimony by both parties, Damon’s sister, his first wife, Kelly,
and his treating psychotherapist, as well as the deposition
testimony of his friend and Alcoholics Anonymous (AA) sponsor

                                 4
and email exchanges between Damon and Susan in 2016, after
his will had been signed. In her trial brief for the hearing,
Elizabeth argued that Damon’s gift to Susan should be construed
to allow her to live in the smallest of his properties rent free or to
be given the net rental income from that apartment, to be capped
at $2,000 per year. Her theory at trial was that Damon had not
believed Susan could be trusted with money, and so he would not
have wanted to provided her with a monthly sum that might be
spent on things other than rent. Elizabeth argued that by
providing an alternative of receiving only the rent after expenses
had been taken out, and with an annual cap of $2,000, Damon
was encouraging Susan to opt for the alternative of living at the
Sonoma Highway property and to thereby accept secure housing.
      The trial court issued a statement of decision in which it
concluded that “based on the plain meaning of the will, the term
‘rent-free’ means that if [Susan] chooses to live in the apartment,
she would not have to pay any rent. The term ‘rent’ means
anything any other tenant of the apartment would be expected to
pay as rent to the landlord, petitioner Elizabeth Clark.” It
further concluded that “the term ‘rental income’ means that if
[Susan] chooses to live somewhere else, she would receive from
petitioner an amount equal to the rent any other tenant would
pay for the apartment” “up to [a limit of] $2,000.00 per month.”
The court noted that rent on the apartment at issue had been as
much as $1200 per month, and that if “Damon intended to force
[Susan] to stay in the apartment by limiting her ‘rental income’
to $2,000 per year, he would not have any reason to give [Susan]

                                  5
even the choice of receiving any ‘rental income.’ ” It ordered that
“[Susan] has the legal right to choose between residing in the
apartment . . . without paying any rent that any other tenant of
the apartment would pay as rent to [Elizabeth], or receiving the
‘rental value’ of [the apartment] that any other tenant for the
apartment would pay for rent, up to a limit of $2,000.00 per
month.”
      Elizabeth appealed from this order, arguing that the will
should be interpreted to require payment of only the net amount
of actual rent collected each month, up to an annual limit of
$2,000.00.3
                           II. DISCUSSION
      A. Standard of Review
      “[I]n the construction of wills, the cardinal rule to be
observed is to ascertain the intent of the testator, and if that
intent can be clearly conceived, and is not contrary to some
positive rule of law, it must prevail.” (In re Estate of Major (1928)
89 Cal.App. 238, 241.) In reviewing a trial court’s construction of
a will, “we are free to independently interpret the instrument as
a matter of law unless the trial court’s interpretation turned upon
the credibility of extrinsic evidence or required resolution of a
conflict in the evidence.” (Estate of Verdisson (1992) 4

      3 Susan has not filed a respondent’s brief. We do not
consider this to be a concession but reach the merits of
Elizabeth’s appeal. (In re Marriage of Riddle (2005) 125
Cal.App.4th 1075, 1078, fn. 1.) We will examine the record on
appeal based on Elizabeth’s opening brief and will review the
order appealed from for prejudicial error. (Cal. Rules of Court,
rule 8.220(a)(2).)

                                  6
Cal.App.4th 1127, 1135; Estate of Goyette (2004) 123 Cal.App.4th
67, 70.)
      Where a written instrument is ambiguous and the court
receives conflicting extrinsic evidence as an aid in resolving the
ambiguity, we apply the substantial evidence rule to any factual
findings made by the trial court. (Estate of Dodge (1971) 6 Cal.3d
311, 318–319.) In such a case, “any reasonable construction will
be upheld if it is supported by substantial evidence.” (Founding
Members of the Newport Beach Country Club v. Newport Beach
Country Club, Inc. (2003) 109 Cal.App.4th 944, 956; Roden v.
Bergen Brunswig Corp. (2003) 107 Cal.App.4th 620, 625.) In
conducting a substantial evidence review, we resolve any conflicts
and draw all legitimate and reasonable inferences in favor of the
judgment. (Estate of Bristol (1943) 23 Cal.2d 221, 223.)
      The phrase “rental income of the property of up to the sum
of two thousand dollars ($2,000.00)” is ambiguous as it does not
state (1) whether the income is gross or net income; and (2)
whether the $2,000 cap should be applied on a monthly, annual
or one-time basis. Elizabeth implicitly agrees, by acknowledging
that the trial court’s findings of fact must be reviewed for
substantial evidence.
      B. Net vs. Gross Amount of Rent
      The trial court found that in the event Susan opted not to
live in the Sonoma Highway apartment and to instead take the
“rental income” of the property, the amount of rental income
would be calculated without deducting expenses such as taxes,
maintenance, and property management fees. Elizabeth argues

                                 7
there is no evidence to support a finding that Damon “intended to
impose, or that the Will’s terms did impose, upon [Elizabeth], and
by extension his daughter, the affirmative obligation throughout
[Susan’s] life to bear the costs, tenant turnover expenses, income
taxes and upkeep charges all resulting from [Susan’s] own
election to choose the ‘rental income’ from the apartment instead
of rent-free shelter.”
      This overlooks that in the event Susan took the option of
living in the Sonoma Highway apartment rent free, Elizabeth
also would be required to bear the expenses associated with that
apartment without receiving rent. Although there may be some
additional expenses associated with tenant turnover, she is not
placed in a significantly worse situation because someone other
than Susan pays rent for the property and then she must pay
that amount to Susan. One can infer from the evidence that
Damon intended to provide for Elizabeth and his daughter by the
fact that he left the lion’s share of his property to Elizabeth. But
the gift to Susan, should she decide to live in the Sonoma
Highway apartment, would require Elizabeth to pay the cost of
maintaining it even as she did not receive any rent for it. It is
reasonable to conclude that Damon intended to burden Elizabeth
to the same amount if she made a different decision.
      The evidence shows that Damon had a conflicted
relationship with Susan at times, but it also supports an
inference that he wished to ensure she would have stable housing
in the event he died before she did. Although there was evidence
that when Damon was alive he intended to limit his assistance to

                                 8
Susan to $300 per month, this is not inconsistent with an intent
to ensure that after his death, when he would have no
opportunity to revisit his assistance to Susan, he would leave her
enough to make sure she would have a place to live. We note
that Damon apparently did not offer Susan the opportunity to
live rent free in the Sonoma Highway apartment while he was
alive, but this does not negate his intent to do so upon his death.
      In his deposition, which was offered into evidence, Terrance
Lundy, Damon’s AA sponsor and friend, testified that although
Susan was a source of anxiety for Damon, he wished to ensure
that she had a place where she could live. Susan testified that
Damon said several times that he wanted to take care of her.
Damon’s first wife, Kelly, testified that Damon wanted Susan to
have a safe place to live. The trial court could reasonably
conclude that in the event that Susan did not opt for living at the
Sonoma Highway apartment, this goal could best be met by
giving Susan the gross amount of the rent for that apartment,
which she could then take and apply to her rent somewhere else.
      Moreover, the Sonoma Highway apartment is part of a
complex in which there were a total of four units. As such, it
would presumably share some expenses with the other units.
This means the calculation of the net income for the apartment
would have to be apportioned based on the number of units in the
complex, the square footage of the unit at issue or some other
formula. It was reasonable for the trial court to conclude that
had Damon meant for the “rental income” to mean net rental

                                 9
income, he would have specified how the net rental income
should be calculated.
       Elizabeth points out that other statutes define “income” to
mean “net income,” citing Civil Code section 731.05 [allocation of
principal and income between tenants and remaindermen],
Probate Code section 16356 [rents received on property allocated
to income], Probate Code section 16326 [“income interest” means
right of a trust beneficiary to receive net income], Probate Code
section 16370 [expenses to be disbursed out of trust income] and
Probate Code section 16371 [disbursements to be made from
principal of trust]. There was no evidence to show that Damon, a
layperson who drafted his own will, attached any technical
meaning to the term “rental income” based on these statutes. In
ascertaining Damon’s intent, we look to the purpose of the gift,
which in this case was to provide Susan with housing.
       Elizabeth also notes that the owner of real property usually
does not have the duty to maintain it for the benefit of a life
tenant, citing Civil Code section 840 [life tenant must keep
buildings and fences in ordinary repair]. We are not persuaded.
This section has no application where it runs contrary to the
testator’s intent. (See Almeida v. Price (1951) 107 Cal.App.2d
148, 154 [Civ. Code § 840 does not apply when life tenant was
mother of remaindermen and order requiring remaindermen to
pay taxes, insurance and improvements was “eminently fair and
just”].)
       “ ‘A life estate is an estate whose duration is limited to the
life of the person holding it or of some other person.’ ” (Peterson

                                  10
v. Wells Fargo Bank, N.A. (2015) 236 Cal.App.4th 844, 850–851.)
“[A]ll life estates are not created equal. Some are referred to as
‘absolute’ meaning that the owner thereof can do almost anything
with his interest other than commit waste.” (Forrest v. Elam
(1979) 88 Cal.App.3d 164, 170 (Forrest); Civ. Code, § 818 [“The
owner of a life estate may use the land in the same manner as the
owner of a fee simple, except that he must do no act to the injury
of the inheritance.”].) “Others are known as determinable or
contingent because of various sorts of limitations placed upon the
life estate.” (Forrest, at p. 170.)
      In this case, Susan had the right to live in the Sonoma
Highway apartment rent free for the rest of her life, or to receive
the rental income from that apartment. Her interest was not the
equivalent of a fee simple, and she did not have an absolute life
estate that entitled her to dispose of the apartment, either by
renting or selling it. It was part of a piece of property gifted to
Elizabeth in fee simple, and Susan’s control over it was limited to
living there or collecting the income. In light of this, Civil Code
section 840 did not apply.
      In support of her argument that “rental income” as used in
the will means net income, Elizabeth cites the evidence that she
and her daughter were Damon’s priority, that Damon wanted to
encourage Susan to live at the Sonoma Highway apartment, and
that Damon told her he could give Susan “what’s left of the rent”
in the event she decided not to live there. This was evidence that
the trial court could have relied upon to reach a contrary result.
But it does not render the evidence insufficient to show that the

                                      11
reference to “rental income” was to be calculated without regard
to expenses. Because the extrinsic evidence was in conflict, we
may not second guess the trial court, so long as its decision was
supported by substantial evidence.
      C. $2,000 Cap on Rental Income
      Elizabeth challenges the trial court’s finding that the
$2,000 cap was appliable to monthly, not yearly, rent. We note
that in her petition, she assumed the cap applied each month; it
was only at trial that she changed her position and advocated for
a yearly cap. We reject the claim.
      Accepting that Damon’s intent in making the gift to Susan
was to insure that she have stable housing, this purpose is not
served by capping the amount which she is entitled to receive at
$2,000 each year, an amount equivalent to less than two months’
worth of rent for the apartment. Although Elizabeth argues that
a $2,000 annual cap is consistent with Damon’s desire that Susan
opt to live in the Sonoma Highway apartment, as the trial court
noted, “if [Damon] intended to force [Susan] to stay in the
apartment by limiting her ‘rental income’ to $2,000 per year, he
would not have any reason to give [Susan] even the choice of
receiving any ‘rental income.’ ” We also note that residential rent
is generally paid on a monthly, not annual basis; it makes sense
that if nothing is said to the contrary, a cap on residential rental
amounts would be on a monthly basis as well. (See Civ. Code,
§ 1944 [“In the absence of any agreement respecting the length of
time or the rent, the hiring is presumed to be monthly.”].)

                                 12
       Resolution of an ambiguity based on the admission of
extrinsic evidence is for the trier of fact and must be upheld if
supported by substantial evidence. (Baker v. Ramirez (1987) 190
Cal.App.3d 1123, 1132–1133.) Substantial evidence supports the
trial court’s conclusion that $2,000 was a monthly, not an annual,
cap.
       D. Defining “Rental Income” as the Fair Market Rental
          Value of the Apartment
       Elizabeth finally contends the trial court erred in defining
“rental income” to mean “an amount equal to the rent any other
tenant would pay for the apartment” and in requiring her to pay
Susan the “rental value” of the apartment, rather than the rent
actually received. She argues that the plain language of the will
refers to income actually received rather than the rental value
and asserts there is no evidence that Damon intended for her to
pay Susan the rental value of the apartment if it was not in fact
rented out (or was rented for less than fair market value). With
this contention, we agree.
       The trial court’s disposition has the benefit of providing
Susan with an uninterrupted stream of income with which she
can secure alternative rental housing, and of avoiding future
disputes between Elizabeth and Susan arising from a failure to
rent the apartment. We understand the trial court’s impulse.
But the plain language of the will refers to “rental income” not
“rental value”. Because the language is clear and explicit in this
regard and cannot reasonably be construed to mean fair market
rental value rather than actual rent, the plain meaning governs

                                 13
and it is unnecessary to resort to extrinsic evidence. (See Trolan
v. Trolan (2019) 31 Cal.App.5th 939, 949.) In any event, nothing
in the testimony presented supports the conclusion that Damon
intended Elizabeth to pay the apartment’s rental value to Susan
regardless of whether or not it was actually rented.
      We also note that Susan did not argue at trial or in her
response to Elizabeth’s petition that she should receive the fair
market rental value of the apartment, instead claiming that she
was entitled to be paid the rent received, without regard for
expenses. The issue of fair market rental value was therefore
beyond the issues litigated and should not have been included in
the judgment. (C.J.A. Corp. v. Trans-Action Financial Corp.
(2001) 86 Cal.App.4th 664, 673.)
                        III.   DISPOSITION
      The trial court shall modify its statement of decision and
the judgment consistent with this opinion. The judgment is
otherwise affirmed. The parties shall bear their own costs in the
interests of justice.

                                14
                                 NEEDHAM, J.

We concur.

JONES, P.J.

BURNS, J.

Clark v. Radelt / A159182

                            15