Court Opinion

ID: 2702965
Source: CourtListenerOpinion
Date Created: 2014-08-04 20:01:51.118048+00
Date Added: 2024-06-11T12:51:30.032972
License: Public Domain

Filed 8/4/14
                          CERTIFIED FOR PUBLICATION

               IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                           SECOND APPELLATE DISTRICT

                                     DIVISION TWO

Conservatorship of the Person and Estate of        B245202
FRANK PARKER.
                                                   (Los Angeles County
                                                   Super. Ct. No. BP094578)

MARK BOOTHBY,

        Petitioner and Respondent,

        v.

RICHARD NORENE et al., as
Coconservators, etc.,

        Objectors and Appellants.

        APPEAL from a judgment of the Superior Court of Los Angeles County.
Michael Levanas, Judge. Affirmed.

        Weinstock Manion, Blake A. Rummel; Law Office of Cynthia R. Pollock,
Cynthia R. Pollock for Objectors and Appellants.

        Law Offices of L’tanya M. Butler, L’tanya M. Butler; Law Offices of Howard A.
Kapp, Howard A. Kapp for Petitioner and Respondent.
                ___________________________________________________
       A conservatee’s debts—incurred before creation of the conservatorship—must be
paid from his estate. (Prob. Code, § 2430, subd. (a)(1).)1 Here, a creditor seeks to collect
an exemplary damages award from a tortfeasor who was placed under a conservatorship
after he was sued for his wrongdoing. We conclude that the debt was incurred when the
conservatee committed the tort, not when the jury rendered its verdict awarding damages
for the wrongful conduct. As a result, the conservator must pay the punitive damages
award to the creditor from the conservatee’s estate.
                                         FACTS2
       Mark Boothby and Frank Parker met in 1990. They decided to start “flipping”
homes: Parker would contribute funds to purchase and remodel homes and Boothby
would contribute “sweat equity” by doing the necessary work. They agreed to split sale
profits equally after reimbursing Parker for his outlays.
       In 2002, Boothby found undeveloped land in Lancaster (the Property), which the
two men purchased for $495,000. During escrow, they received an offer for the Property
that would yield them each a profit of $250,000. They declined the offer and formed a
corporation called Fresh Start Developments (Fresh Start) to take title. They planned to
build condominiums. Before escrow closed, Parker informed Boothby that he wanted
title to be in his name alone. Boothby quitclaimed his right to ownership of the Property.
       The men agreed that Parker would fund preparations for developing the Property
and Boothby would facilitate the process. They reaffirmed their agreement to share
profits equally after reimbursing Parker. Boothby relocated to Lancaster to oversee the
project, meeting with architects and engineers and learning the requirements for

1      Unlabeled section references in this opinion are to the Probate Code.
2      The facts are taken from this Court’s opinion in Boothby v. Parker (Mar. 5, 2010,
B200679 (nonpub. opn.). We take judicial notice of the prior appeal as a related
proceeding leading to the present appeal. (Evid. Code, §§ 452, subd. (d), 459, subd. (a);
Taliaferro v. Davis (1963) 216 Cal.App.2d 398, 401.)

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developing land. Parker paid Boothby’s expenses, including rent, telephone, a truck, and
a $2,000 weekly advance.
       The partners considered selling the Property in 2003, when Parker was ill, and
Boothby found a local developer who offered to purchase it for $3 million. Parker and
Boothby decided not to sell the Property. Instead, they contemplated joining forces with
the developer in a deal in which Fresh Start would receive 75 percent of the profit from
the sale of the condominiums and the developer would receive 25 percent.
       To document this proposal, Boothby contacted Attorney Olga Karasik, who met
with Boothby and Parker in January 2004. She understood that they were partners who
agreed to share profits from the development project. She advised them about the risks of
individual ownership, and suggested holding title through a California limited liability
company. Boothby signed a retainer agreement identifying himself, Parker and Fresh
Start as Karasik’s clients. Karasik next met with Boothby, Parker and the developer from
Lancaster to discuss the proposed development agreement.
       In February 2004, Parker’s friends and family convinced Parker to sever his
relationship with Boothby. They believed that Boothby was taking advantage of Parker.
Parker angrily demanded the keys to the truck he had acquired for Boothby’s use, and
would not answer Boothby’s questions or confirm their partnership. He ceased paying
rent on Boothby’s apartment. They stopped communicating.
       Karasik redrafted the development agreement to exclude Fresh Start, listing only
Parker and the Lancaster developer as the contracting parties. She created a joint venture
in which Parker received 75 percent of the profits and the developer received 25 percent.
In March 2004, Krasik terminated her representation of Boothby, claiming a conflict of
interest between Parker and Boothby. Afterward, Boothby learned of the joint venture
agreement between Parker and the developer.
       On February 8, 2005, Boothby sued Parker for breach of contract, breach of
fiduciary duty, fraud, defamation, and emotional distress. Boothby asserted claims
against Karasik and her law firm for malpractice and breach of fiduciary duty. Parker

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cross-complained for elder abuse, fraud and misrepresentation, alleging that he suffered
from diminished mental capacity due to dementia, alcoholism and diabetes.
       By special verdict, a jury found that Parker breached his fiduciary duty to
Boothby, and acted with malice, fraud, oppression, or despicable conduct. The jury
found against Karasik and her law firm for malpractice and breach of fiduciary duty. In a
judgment entered May 4, 2007, Boothby was awarded $725,000 in economic damages
against Parker and the law firm defendants, jointly and severally, and $350,000 in
punitive damages against Parker and the Parker Family Trust.
       The defendants appealed. This Court affirmed the punitive damages award, but
reduced economic damages from $725,000 to $325,000. Subsequently, the law firm
defendants tendered compensatory damages of $325,000 to Boothby, leaving unpaid the
punitive damages award of $350,000.
       While Boothby’s lawsuit was pending, and before judgment was entered, a
temporary conservatorship was established for Parker in October 2005; this became
permanent in February 2006. Boothby petitioned the probate court to direct Parker’s
conservator to pay the judgment. Parker resisted the petition.
       The probate court ruled that (1) Parker’s debt to Boothby pre-dates the
conservatorship “because the debt was incurred at the time the tort occurred” and (2) all
debts and expenses incurred before the conservatorship “must be paid by the Conservator
regardless of whether that payment would impair the ability to provide the necessaries of
life to the Conservatee.” The court ordered the conservator to pay Boothby $350,000 in
punitive damages and $137,958 in interest on the award.
                                      DISCUSSION
       Conservatorships are governed by the Probate Code. (§ 1800 et seq.) Boothby
petitioned the probate court to order the conservator to pay a debt due from Parker, the
conservatee. (§ 2404, subd. (a).) Appeal may be taken from the order directing the
conservator to pay a debt or claim. (§ 1300, subd. (d).) The appeal presents a question of
law regarding the interpretation and application of the Probate Code to undisputed facts.

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       Boothby sought payment of the judgment pursuant to section 2430, which states
that a conservator “shall pay” from the principal and income of the estate “debts incurred
by the [ ] conservatee before creation of the [ ] conservatorship.” (§ 2430, subd. (a)(1),
italics added.) By contrast, payment of debts incurred by the conservatee during the
conservatorship “are not required to be made to the extent the payments would impair the
ability to provide the necessaries of life to the conservatee.” (§ 2430, subds. (a)(3), (b).)
       Parker’s conservators acknowledge the mandatory statutory language applying to
debts incurred before creation of the conservatorship, versus the “necessaries of life”
discretion afforded to debts incurred during the conservatorship. They posit that the debt
in this case was incurred “during the conservatorship”—and is therefore discretionary—
because the judgment Boothby obtained against Parker was entered after the
conservatorship was established. In the conservators’ view, because Boothby became a
judgment creditor after the jury rendered its verdict, “the ‘debt’ Boothby seeks to satisfy
clearly post-dates the Conservatorship.”
       The law does not support the conservators’ view. Debts arising from wrongful
conduct are incurred when the tort is committed, not when judgment is entered.
       “It is well settled in this state that the relationship of debtor and creditor arises in
tort cases the moment the cause of action accrues.” (Hansen v. Cramer (1952) 39 Cal.2d
321, 323.) “[T]he term ‘debt,’ used in our statutes, ‘should be given its modern legal
significance, as including any sort of obligation to pay money.’” (Chalmers v. Sheehy
(1901) 132 Cal. 459, 465.) A debtor is someone who “is or may become liable to pay
money to another, whether such liability is certain or contingent.” (Civ. Code, § 3429.)
A person who causes injury becomes a debtor on the date of the injury-causing incident,
even if the amount of the debt is indefinite until an award is made. (Schwartz v. Brandon
(1929) 97 Cal.App. 30, 37-38.) The inverse is true as well: someone injured by
another’s tort “becomes a creditor when the cause of action accrues,” even before legal
action is taken. (Chalmers v. Sheehy, supra, 132 Cal. at p. 465. See Civ. Code, § 3430 [a
creditor is one who “is, or may become, entitled to the payment of money”].) A money

                                               5
judgment is “no more than a judicial determination of the validity of [an] existing claim.”
(Adams v. Bell (1936) 5 Cal.2d 697, 701.)3
       Nothing in the Probate Code suggests a legislative intent to disrupt the settled rule
that a debt is incurred when a tort is committed. In the context of administering
decedents’ estates, a “debt” means “a claim” (§ 11401) and a claim means a demand for
payment arising in contract or tort, whether due or not due, accrued or not accrued,
contingent, liquidated or unliquidated. (§ 9000, subd. (a)(1).) Thus, under the Probate
Code, an unresolved tort claim is a “debt.” With regard to conservatees, the Supreme
Court has acknowledged that “debts” include tort, quasi-contractual and contractual
obligations. (Board of Regents v. Davis (1975) 14 Cal.3d 33, 42-44 [interpreting the
predecessor statute to § 2430].)
       Our conclusion that the Legislature intended for conservatees to be liable for
tortious acts is fortified by Civil Code section 41, which states that persons of unsound
mind are liable for exemplary damages if they are capable of knowing that the act was
wrongful “at the time of the act.” This statute underscores that responsibility for punitive
damages arises on the date the wrongful act was committed, not when a jury verdict or
judgment is rendered. In this instance, Parker tried—and failed—to prove at trial that he
suffered from diminished mental capacity due to dementia, alcoholism and diabetes.
Thus, the jury believed that Parker knew his act was wrongful “at the time of the act,”
making him liable for pre-conservatorship wrongdoing under Civil Code section 41.
       The conservators maintain that Boothby cannot recover because the jury verdict
“makes no mention of when either breach of contract or the tort [breach of fiduciary
duty] occurred.” It is evident—indeed it is res judicata, in light of the prior appeal—that

3      Although the cited cases involve fraudulent transfers, the Civil Code statutes are
not part of the Uniform Fraudulent Transfer Act (Civ. Code, § 3439 et seq.); rather, they
describe “General Principles” regarding the relations between debtor and creditor (Civ.
Code, §§ 3429-3434). The rule that the debt arises when the tort is committed has been
applied in probate cases elsewhere. (See Dunn v. Lindsey (N.M. 1961) 361 P.2d 328,
329; State v. Smith (Ariz.App. 1967) 431 P.2d 902, 905.)

                                             6
the tort occurred and Boothby’s claim accrued in 2004, when Parker and Attorney
Karasik secretly excluded Boothby from the agreement to develop the Property, to
prevent him from profiting from the sale of the condominiums that were to be built.
Boothby sued in February 2005, before the conservatorship was created.
       The conservators argue that even if the debt for punitive damages was incurred
before the conservatorship was created, section 2430 “should not be interpreted so
harshly as to mandate payment when to do so would deprive the Conservatee of the
‘necessities of life.’”
       A review of statutory history indicates that the Legislature once agreed with the
conservators’ line of reasoning. The Probate Code formerly applied the “necessaries of
life” exception to debts incurred either before or after creation of the conservatorship.
(Former § 1858; Stevenson v. Superior Court (1970) 9 Cal.App.3d 904, 906-907 [stating
that former § 1858 excepts the necessaries of life from the payment of debts incurred
before creation of the conservatorship].)4 When section 2430 was enacted, addressing
the same subject, the Legislature dropped the “necessaries of life” exclusion for debts
incurred before creation of a conservatorship (§ 2430, subd. (a)(1)), but kept the
exclusion for debts incurred during the conservatorship (§ 2430, subds. (a)(2), (b)).
       We must presume that the Legislature purposefully removed an advantage
previously conferred on conservatees, which worked to the disadvantage of creditors.
The repeal of a prior statute together with enactment of a new law on the same subject,

4       Former section 1858 read, “The conservator shall pay . . . any debts incurred by
the conservatee before creation of the conservatorship; and he shall pay any debts
incurred by the conservatee after the creation of the conservatorship, except that ability to
continue to provide the conservatee with the necessaries of life, out of the estate, shall not
be impaired. The conservator shall pay debts incurred by the conservatee during the
conservatorship for the necessaries of life, and . . . shall pay any other debts incurred by
the conservatee during the conservatorship only if they appear to be such as a reasonably
prudent person might incur. The conservator may petition the court for instructions when
there is doubt whether a debt should be paid.” Former section 1858 was repealed in
1979. (Stats. 1979, ch. 726, § 2, p. 2334.)

                                              7
with deletions, strongly suggests that the Legislature intended to change the law. (People
v. Mendoza (2000) 23 Cal.4th 896, 916; People v. Valentine (1946) 28 Cal.2d 121, 142.)
A legislative intent to change the law is presumed where one statute is repealed and
another statute with different wording is enacted on the same subject. (Garcia v. Sterling
(1985) 176 Cal.App.3d 17, 21.) If the Legislature intended to exempt all indebtedness
that impairs payment for the conservatee’s living expenses, it could have reenacted the
wording in former section 1858. We cannot rewrite section 2430 to confer protection by
judicial fiat for conservatees’ assets after the Legislature removed that protection.
       Finally, the conservators rely on section 2404, but it does not apply here. Section
2404 authorizes the probate court to order a conservator to furnish a conservatee with
comfortable and suitable support in the event that the conservator fails, neglects, or
refuses to do so. There is no claim or evidence that the conservators failed, neglected or
refused to furnish suitable support to Parker, and we decline to speculate whether this
may occur at some unknown time in the future. The only thing that is certain at this point
is that Parker breached his fiduciary duty to Boothby in 2004, he incurred a debt to
Boothby at that time, and the conservators must pay Parker’s pre-conservatorship debt to
Boothby under section 2430.

                                      DISPOSITION
       The judgment is affirmed.
       CERTIFIED FOR PUBLICATION.

                                           BOREN, P.J.
We concur:

       CHAVEZ, J.                          FERNS, J.*

_______________________________________________________________

*     Judge of the Los Angeles Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.

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