Court Opinion

ID: 4202598
Source: CourtListenerOpinion
Date Created: 2017-09-11 21:21:50.18042+00
Date Added: 2024-06-11T14:40:53.198761
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

KIMBERLY A. HANSEN, as her              )      No. 74636-7-1
separate estate, formerly known as      )
KIMBERLY ROZGAY,                        )
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                    Appellant,         )                                       r. .:
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MARK A. ROZGAY, individually and in )                                           a    wrnr.,
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his capacity as Personal Representative)                                            =r-
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                                                                                    -40
Estate of BARBARA ROZGAY,              )                                             o-
Trustee of the CORDES TRUST,           )                                        C71 r<
                                                                                       ....
ROZGAY FAMILY INVESTMENTS,             )
LLC, a Washington Limited Liability    )
Company and the marital community of )
MARK ROZGAY AND BABBIE
ROZGAY, Husband and Wife,              )       UNPUBLISHED OPINION

                    Respondents.        )      FILED: September 11,2017

      MANN, J. —Appellant Kim Hansen (Hansen) and Respondent Mark Rozgay

(Rozgay) are two of four children adopted by Clarence and Barbara Rozgay. In

December 2010, Rozgay assisted his parents in finding an estate planning lawyer who

prepared a series of estate documents including a revocable trust and irrevocable trust.

One effect of the 2010 estate plan was to disinherit Hansen from her parents' estate.
No. 74636-7-1/2

       After her mothers death, Hansen brought this action seeking to invalidate

several of the estate documents on the grounds that her parents' lack of capacity and

Rozgay's undue influence. The trial court dismissed Hansen's action on summary

judgment.

       We affirm in part and reverse in part. We also vacate the trial court's award of

attorney fees.

                                               FACTS

                A.     Cordes Trust

       Barbara Rozgay's parents, Herman and Harriet Cordes, established the "Cordes

Living Trust of 1979" (Cordes trust). The Cordes trust was established to meet

Barbarassi expenses for life, then, upon her death, the assets were to be distributed to

Barbara and Clarence's four children as residual beneficiaries. The Cordeses originally

conveyed their Hood Canal waterfront home to the Cordes trust. In 1991, however, the

Hood Canal home was conveyed to Barbara as her separate property. In 2004,

Barbara's son Rozgay became the trustee of the Cordes trust. Rozgay and Hansen,

along with their two siblings Michael and Lisa, remain the residual beneficiaries of the

Cordes trust.

       B.        2010 Estate Planning

       In 2010, Clarence and Barbara updated their estate planning. In October 2010,

Rozgay took Barbara to meet with the Cordes trust accountants to discuss tax planning,

the Hood Canal home, and a community property collection of art. The accountants

        I In order to avoid confusion, we refer to Barbara and Clarence Rozgay by their first names. No
disrespect is Intended.
                                                -2-
No. 74636-7-1/3

recommended Rozgay obtain an appraisal for the Hood Canal house, which he

subsequently did. Rozgay then contacted an estate planning attorney, Kanoa Ostrem,

based on a referral from a business associate. On December 21, 2010, Rozgay

accompanied Clarence and Barbara to meet with Ostrem and a financial planner.

      Following the December meeting, Ostrem sent an e-mail to Rozgay with an

outline and budget for an estate plan that included a transfer of the Hood Canal house.

One of the items left unresolved in the outline was that "Mr. and Mrs. Rozgay must

decide about Kim's share." Ostrem explained that he could complete "the Hood Canal

portion this year and the remaining planning shortly after Mr. and Mrs. Rozgay make a

decision about Kim's share." The next morning, Rozgay responded by e-mail telling

Ostrem to "please move forward on all of this."

      Ostrem ultimately prepared 24 estate planning documents for Barbara and

Clarence. The documents included the last will and testaments for Barbara and

Clarence, a community property agreement, general durable powers of attorney, and

medical powers of attorney. The documents also established the Rozgay Family Living

Trust (Living Trust), the Rozgay Irrevocable Trust (Irrevocable Trust), and the Rozgay

Family Investments, LLC (LLC).

      Ostrem e-mailed the documents to Rozgay on December 23, 2010. According to

Ostrem's e-mail, "your parents need to make a decision about Kim's share. That is the

only blank in the documents." Ostrem testified that he met alone with Clarence and

Barbara on December 23 or 24, 2010, but did not have records of the meeting. Detailed

daily journals by Barbara and Clarence's full-time caregivers do not reference any

meetings between December 22 and December 26, 2010.

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No. 74636-7-1/4

      Rozgay, Clarence, and Barbara next met with Ostrem on December 27, 2010, at

Clarence and Barbara's home. Clarence and Barbara executed the 24 documents

creating a comprehensive estate plan. By way of summary, the estate planning

documents resulted in the following actions:

      First, Clarence and Barbara entered a community property agreement that

irrevocably transferred Barbara's separate property Hood Canal house and her

investment portfolios to the marital community.

      Second, Clarence and Barbara created the LLC. They were each originally 50-

50 members in the LLC. Rozgay was named as the LLC manager. Clarence and

Barbara then deeded the Hood Canal house to the newly created LLC in exchange for

membership units.

       Third, Clarence and Barbara created the Irrevocable Trust. Clarence and

Barbara were named as trustors and Rozgay was named as the Trustee. Under the

terms of the Irrevocable Trust, during Clarence and Barbara's lifetime, the Trustee

(Rozgay) was to distribute net income as necessary to support Rozgay, his brother

Michael, and their families. Upon Clarence and Barbara's deaths, the Irrevocable Trust

was to be divided between Rozgay, his brother Michael, and their families. The

Irrevocable Trust made no provision for Hansen or her sister Lisa.

       With the Irrevocable Trust established, Clarence and Barbara both signed three

assignments conveying the majority of their individual membership units in the LLC to

the Rozgay Irrevocable Trust. The rest of their individual units were conveyed to the

Irrevocable Trust through a signed purchase and sale agreement. The end result was

that the Rozgay Irrevocable Trust became the sole member of the LLC. Clarence and

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No. 74636-7-1/5

Barbara received a promissory note in payment for their units from the Irrevocable

trust.2

          Fourth, Clarence and Barbara created the Living Trust and transferred their

remaining community property into it. Clarence and Barbara then deeded their Medina

home to the Living Trust. The Living Trust was established to pay Clarence and

Barbara's expenses while there were alive, and then be distributed to Rozgay, his

brother Michael, and their families, after Clarence and Barbara's death. The Living

Trust expressly made no provision for Hansen or Lisa.

          Fifth, Clarence and Barbara signed their wills. The wills made provisions to

transfer tangible personal property to the surviving spouse, or if the spouse was

deceased, to Rozgay, his brother Michael, and their families. The wills expressly made

no provision for Hansen or Lisa. Any residual property was to be distributed to the

Living Trust.

          Finally, Rozgay was made the attorney-in-fact for both Clarence and Barbara,

under a durable power of attorney and a medical power of attorney.

          C.     Post Estate Plan

          Beginning in 2009 or early 2010, Clarence and Barbara had full-time live-in

caretakers. In February 2011, Clarence and Barbara were institutionalized in the

Memory Loss Care Unit of Overlake Terrace. At the time he checked them in, Michael

informed the Memory Loss Care Unit that Clarence and Barbara both were incontinent,

        2 Rozgay testified that there was an oral agreement that the promissory note was never intended
to be paid, but would be satisfied with gifts over the course of time."
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No. 74636-7-1/6

had dementia, and had CPAP machines. Barbara had a feeding tube. Barbara died in

September 2011. Rozgay became her personal representative.

       After Barbara's death, Hansen received notice of Barbara's probate and learned

she had been disinherited. Hansen sent Rozgay an e-mail questioning whether Rozgay

had been involved in the decision to disinherit her. Rozgay responded that he had not

told Barbara and Clarence who to include in their will, however, he had told them to

include himself and Michael in the inheritance of the Hood Canal house, because "no

one had heard from" Hansen. Hansen became suspicious of Rozgay's involvement in

the estate plan and requested an accounting from Rozgay, as the trustee of the Cordes

trust. Rozgay provided Hansen with a formal accounting of the Cordes trust.

       Hansen then filed this action before the King County Superior Court. The

complaint sought, in part, to (1) terminate the power of attorney appointing Rozgay as

attorney-in-fact for Clarence,3 (2) to invalidate the Irrevocable Trust, Livable Trust, and

LLC, and restore the probate estate of Barbara for Clarence, and (3) an order quieting

title to the Hood Canal house distributing 50 percent to Clarence and 50 percent for the

benefit of all four of the Rozgay children as intestate heirs, and (5) damages.

       On January 4, 2015, the trial court granted Rozgay's motion for summary

judgment dismissing all of Hansen's claims. The trial court subsequently granted

Rozgay's motion for attorney fees pursuant to the Trust Estate Dispute Resolution Act,

Ch. 11.96A (TEDRA), RCW 11.94.120, and RCW 11.24.050. The trial court awarded

       3 Clarence Rozgay died while this matter was pending rendering moot Hansen's claim to remove
Rozgay's power of attorney.
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No. 74636-7-1/7

Rozgay $174,603.50 for attorney fees and $16,329.66 for costs against Hansen's

marital community. Hansen appeals.

                                        ANALYSIS

                                 Exclusion of Testimony

       Before reaching the merits of the substantive arguments, we must resolve an

evidentiary issue. In response to Rozgay's motion for summary judgment, Hansen

offered a declaration from her expert Jullie M. Gray, MSW, a licensed independent

clinical social worker. Based on her knowledge, skill, experience, training, and

education, combined with her review of medical records, deposition transcripts, and

journal entries from Clarence and Barbara's full-time caregivers, Gray opined that by

December 2010, Clarence and Barbara had very serious cognitive problems and "could

not possibly have read or understood the contents of the documents presented for their

signature on December 27, 2010? Gray further opined that Clarence and Barbara were

"particularly vulnerable to undue influence over the conduct of their personal affairs,

including financial affairs."

       In response to Rozgay's motion, the trial court struck Gray's declaration, stating

"the testimony of expert witness Jullie Gray is stricken and not considered because she

is not qualified to render medical opinions and Plaintiff failed to timely disclose her

opinion? Hansen argues that the trial court erred in striking the declaration testimony of

her expert. We agree.

       A.      Discovery Sanction

       We review a trial court's decision to exclude evidence for an abuse of discretion.

Jones v. City of Seattle, 179 Wash. 2d 322, 337, 314 P.3d 380 (2013). A court abuses its

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No. 74636-7-1/8

discretion in admitting or excluding expert testimony when its decision is manifestly

unreasonable or based on untenable grounds or reasons. The exclusion of testimony

for discovery violations is a severe sanction. Before imposing such a sanction, it must

be apparent from the record that the trial court explicitly considered the three Bumet

factors: (1) whether a lesser sanction would probably suffice, (2) whether the violation

was willful or deliberate, and (3) whether the violation substantially prejudiced the

opposing party. Burnet v. Spokane Ambulance, 131 Wash. 2d 484, 494, 933 P.2d 1036

(1997); Jones 179 Wash. 2d at 338. The record before us is devoid of any analysis of the

Burnet factors.

       Hansen's August 2015 primary witness list disclosed that Gray would testify as

an expert witness "regarding the capacity of Clarence and Barbara Rozgay." The

disclosure included Gray's curriculum vitae (CV). During discovery, Rozgay asked

Hansen to identify all evidence that would support her contention that Clarence and

Barbara lacked capacity. Hansen's October 2015 response again identified the expert

testimony of Gray. While Hansen's response did not include the specifics of Gray's

opinions, Rozgay did not request additional information or seek an order compelling

discovery.

       Even though Hansen's initial disclosure was incomplete, there is no evidence

that a lesser sanction, such as granting Rozgay an extension and leave to depose Gray,

was considered. The trial court abused its discretion in excluding Gray's testimony due

to Hansen's delay in disclosing Gray's opinion.

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No. 74636-7-1/9

       B.       ER 702

       The trial court also found that Gray was not qualified "to render medical

opinions? The trial court did not explain the basis for this decision. ER 702 controls the

testimony of experts?' On summary judgment the court engages in a two-part inquiry:

"(1) does the witness qualify as an expert; and (2) would the witness's testimony be

helpful to the trier of fact." State v. Guilliot, 106 Wash. App. 355, 363, 22 P.3d 1266

(2001); Acord v. Pettit, 174 Wash. App. 95, 302 P.3d 1265 (2013). Once a witness is

qualified as an expert, argument goes to the weight—not the admissibility of the

testimony. Keegan v. Grant Cv. Pub. Util. Dist. No. 2 34 Wash. App. 274, 283, 661 P.2d
146 (1983).

        Ordinarily, "[q]ualifications of expert witnesses are to be determined by the trial

court within its sound discretion, and rulings on such matters will not be disturbed

unless there is a manifest abuse of discretion." Oliver v. Pacific Northwest Bell Tel. Co.,

106 Wash. 2d 675, 683, 724 P.2d 1003 (1986)). However, "[Ole de novo standard of

review is used by an appellate court when reviewing all trial court rulings made in

conjunction with a summary judgment motion." Folsom v. Burger King, 135 Wash. 2d 658,

663, 958 P.2d 301 (1998); Sevbold v. Neu, 105 Wash. App. 666, 678, 19 P.3d 1068

(2001).

        Rozgay argues that Gray was not qualified to opine on Clarence and Barbara's

capacity and vulnerability to undue influence because she is not a licensed physician.

We disagree. A witness may be qualified as an expert by her knowledge, skill,

        4 "If scientific, technical, or other specialized knowledge will assist the trier of fact to understand
the evidence or to determine a fact at Issue, a witness qualified as an expert by knowledge, skill,
experience, training, or education, may testify thereto In the form of an opinion or otherwise? ER 702.

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No. 74636-7-1/10

experience, training, or education. ER 702. "Practical experience is sufficient to qualify

a witness as an expert: State v. Ortiz 119 Wash. 2d 294, 310, 831 P.2d 1060 (1992),

overruled on other grounds, State v. Condon, 182 Wash. 2d 307, 343 P.3d 357 (2015).

Washington courts have held that certified social workers, psychologists, and mental

health social workers can be competent to diagnose mental disorders and provide

expert opinion about mental disorders. See pA‘, In re Det. of A.S., 138 Wash. 2d 898,

918, 982 P.2d 1156 (1999) (social worker may testify to the existence of a mental

disorder); Saldivar v. Momah, 145 Wash. App. 365, 397-98, 186 P.3d 1117 (2008) (social

worker may testify regarding whether individual was suffering from PTSD).

       Gray's extensive CV was included with her December 2015 declaration. It shows

that she obtained a Masters of Social Work from the University of Washington in 1991.

She is licensed or certified as: (1) a Licensed Independent Clinical Social Worker, (2) a

Certified Care Manager, certified by the National Academy of Certified Care Manager,

(3) was certified by the Washington Supreme Court as a Certified Professional

Guardian from 2008 to 2013, and (4) holds a Geriatric Mental Health Certificate issued

by the University of Washington. Gray serves on the King County Elder Abuse Council,

and at the time of her declaration was the president of the National Academy of

Certified Care Managers. She has instructed health care and social service

professionals, as well as the general public, on issues related to aging, ethics, and

dementia. From 1995 to 2004, Gray was a lead social worker for the Evergreen

Emergency Department where her work included mental health evaluations and

assessment of elder abuse. From 2004 to 2007, Gray was a case manager with

Evergreen Hospice where her duties included conducting psychosocial assessments.

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No. 74636-7-1/11

Gray is currently a principal at a private care-management company providing

consulting to older adults, adults with disabilities, and families regarding problems

related to aging and dementia.

       We find that Gray was qualified to opine on issues related to Clarence and

Barbara's capacity and vulnerability to undue influence. While Gray's opinions were

based on her review of records and she did not conduct her own examination, this goes

to the weight of the testimony, not its admissibility. Keegan, 34 Wash. App. at 283.

Because Gray is qualified to give her opinions and her opinions may be helpful to the

trier of fact, the trial court abused its discretion in striking and failing to consider Gray's

declaration. Guilliot, 106 Wash. App. at 363.

                                    Statute of Limitations

       Hansen argues the trial court erred in concluding that her claims challenging the

estate planning documents, including the formation of the LLC, the Irrevocable Trust

and the Living Trust were "will contests" and thus time-barred by ROW 11.24.010. A

trial court's interpretation of a probate statute is a question of law that we review de

novo. In re Estate of Jones, 152 Wash. 2d 1, 8-9, 93 P.3d 147 (2004).

       An action is considered a will contest where the fundamental thrust of the claim is

to determine issues "affecting the validity of the will." Cassell v. Portelance, 172 Wn.

App. 156, 162, 294 P.3d 1(2012); ROW 11.24.010. A will contest must be filed within

four months following probate. ROW 11.24.010. Washington courts strictly enforce the

requirements for commencing a will contest. In re Estate of Jeosen, 184 Wash. 2d 376,

381, 358 P.3d 403 (2015) (citing In re Estate of Toth, 138 Wash. 2d 650, 653, 981 P.2d
439 (1999)). "The four-month period is absolute.... If the will contest is not filed prior

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No. 74636-7-1/12

to the expiration of the four-month period, the contest will be absolutely barred." Toth,
138 Wash. 2d at 656.

       There is no dispute that Hansen's lawsuit was filed long after the four-month limit

for contesting Barbara's will. Barbara passed away in September 2011; Hansen filed

this action in December 2014. It is also undisputed that Hansen's complaint did not

challenge Barbara's will. Instead Hansen challenged the validity of the Living Trust, the

Irrevocable Trust, the LLC, and the community property agreement. Rozgay argues

that because the estate planning documents were executed at the same time as the

will, Hansen's action to invalidate the estate planning documents must be deemed a will

contest and subjected to the four-month statute of limitations. On these facts, we

disagree.

       Rozgay relies on Cassell, and In re Estate of Palmer v. World Gospel Mission,

146 Wash. App. 132, 137-38, 189 P.3d 230 (2008). Both cases are factually

distinguishable. Cassell involved a wrongful death action against a doctor brought by

the surviving wife, Rhoda Cassell, as personal representative for her husband David

Finch. Three years after Finch's death, and four days before the wrongful death trial

was scheduled to begin, the doctor moved to dismiss the suit on the basis that the will

appointing Cassell as personal representative was a fraud. Cassell, 172 Wash. App. at

159. The trial court granted a continuance allowing the doctor to address the issue with

the probate court. The doctor was subsequently granted leave to intervene before the

probate court. Cassell, 172 Wash. App. at 156. After the probate court nullified the

original appointment of Cassell as the personal representative, the trial court

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No. 74636-7-1/13

determined that any actions taken by Cassell, including filing the wrongful death action,

were null and void. Cassell, 172 Wash. App. at 161-62.

      This court reversed the probate court's order granting the doctor leave to

intervene before the probate court. While the doctor denied that his motion to intervene

was an attempt to initiate a will contest, we disagreed:

       These allegations—that Finch lacked the capacity to make a will on the
       day he signed in, that he had not signed the will, and that the will was not
       properly witnessed—are precisely what a court considers in a will contest
       under RCW 11.24.010.

Cassell, 172 Wash. App. at 163. Thus, despite the doctor's characterization, we

concluded that a "court may treat a motion as a will contest, even where the

petitioner styles it otherwise." Cassell, 172 Wash. App. at 162 (citing Palmer, 146
Wash. App. at 137-38). And, because the doctor lacked standing to bring a will

contest under RCW 11.24.010, we reversed.

       In Palmer, husband and wife decedents established a revocable living trust

agreement that designated the World Gospel Mission as the 75 percent beneficiary with

the remainder to be designated to their children and grandchildren. On that same date,

the decedents executed pourover wills that bequeathed their entire estates to the living

trust. Palmer, 146 Wash. App. at 134. The husband died in 2001 and the wife died in

2003. Palmer, 146 Wash. App. at 135. Over three years later, one of the decedents'

daughters, Dawn Palmer Golden, moved to disqualify the World Gospel Mission as a

trust beneficiary. Palmer, 146 Wash. App. at 135. A superior court commissioner held

that Golden's claims were, in essence, a will challenge and time-barred under RCW

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No. 74636-7-1/14

11.24.010. The trial court declined to revise the commissioner's decision. Palmer, 146
Wash. App. at 135-36.

      On appeal, Golden argued that her claims challenged the validity of the

testamentary trust as opposed to a will contest. Palmer 146 Wash. App. at 136. The

Court of Appeals disagreed, noting that Golden's challenge to the distribution of the

decedents' estate could not be separated from a challenge to the validity of the portion

of the wills conveying the estate to the living trust. The court found that: "Under these

facts Golden's challenge is, in all important respects, a will contest." Palmer, 146 Wn.

App. at 137.

       Here, unlike Cassell, where the doctor was challenging the signatures on the

will—a blatant will contest—Hansen is not challenging any aspect of Barbara's will. She

is challenging the validity of the estate documents transferring title and assigning

beneficiary interests in Clarence and Barbara's property through the community

property agreement, Irrevocable Trust, LLC, and Living Trust.

       And unlike Palmer, where the irrevocable trust was dependent upon, and funded

only by, the pourover will, the estate documents here were stand-alone and not

dependent upon the will. The community property agreement had the immediate effect

of irrevocably transferring title to Barbara's separate property interest in the Hood Canal

house and her investment portfolio to the marital community. Clarence and Barbara

then deeded the Hood Canal house to the LLC and transferred their interests in the LLC

to the Irrevocable Trust. None of these irrevocable transfers were dependent upon the

will. Similarly, while the wills did provide for any residual property to be distributed to

the Living Trust, the Living Trust was not dependent on this provision in the wills. The

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No. 74636-7-1/15

Living Trust was established in December 2010 and immediately funded by Clarence

and Barbara's remaining community property, and then a month later by the Clarence

and Barbara transferring title to the Medina home into the Living Trust.

       The Living Trust, the Irrevocable Trust, and the LLC, were all created separate

and apart from Barbara's will and a claim challenging their creation does not require the

court to determine issues "affecting the validity or Barbara's will. The trial court erred in

finding that Hansen's claims challenging the community property agreement, trusts, and

LLC were "will contests" barred by RCW 11.24.010.

                           Undue Influence and Lack of Capacity

       Hansen argues next that the trial court erred in dismissing her claims that

Clarence and Barbara lacked capacity to enter the challenged documents and were

subject to undue influence. Because of the high burden of proof required to

demonstrate lack of capacity we agree that, based on the evidence presented,

dismissal was appropriate. However, we agree with Hansen that the trial court erred in

dismissing her claim for undue influence on summary judgment. We address each

claim in turn.

       A         Standard of Review

       We review decisions on summary judgment de novo and engage in the same

inquiry as the trial court. Folsom 135 Wash. 2d at 663. Summary judgment is properly

granted when the pleadings, affidavits, depositions, and admissions on file demonstrate

there is no genuine issue of material fact and the moving party is entitled to judgment as

a matter of law. CR 56(c). The burden is on the moving party to demonstrate that there

are no genuine issues of material fact. Folsom, 135 Wash. 2d at 663. We consider all the

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No. 74636-7-1/16

facts and make all reasonable, factual inferences in the light most favorable to the

nonmoving party. Youno v. Key Pharms., Inc. 112 Wash. 2d 216, 226,770 P.2d 182

(1989). "The motion should be granted only if, from all of the evidence, a reasonable

person could reach only one conclusion." Folsom, 135 Wash. 2d at 663.

       The general principles of summary judgment are supplemented by additional

principles when a party claims undue influence and lack of capacity. The determination

of undue influence and capacity both require proof at trial by clear, cogent, and

convincing evidence, and we incorporate that standard of proof in conducting

substantial evidence review. In re Trust and Estate of Me!ter, 167 Wash. App. 285, 300,

273 P.3d 991 (2012); Kitsap Bank v. Denley, 177 Wash. App. 559, 569-70, 312 P.3d 711

(2013). The party bearing the burden of proof at trial must present sufficient evidence to

make it "highly probable" that the claim will prevail at trial. Kitsap Bank, 177 Wash. App. at

569. Thus, "[a] trial court may grant a summary judgment motion to dismiss if no

rational trier of fact, viewing the evidence in the light most favorable to the nonmoving

party, could find clear, cogent, and convincing evidence on each element." Kitsap

Bank 177 Wash. App. at 569-70 (citing Metter, 167 Wash. App. at 301).5

        5 Our review here necessarily Includes consideration of the Declaration of Jullie Gray. As our
Supreme Court has explained:
        An appellate court would not be properly accomplishing its charge if the appellate court
        did not examine all the evidence presented to the trial court, including evidence that had
        been redacted. The de novo standard of review is used by an appellate court when
        reviewing all trial court rulings made in conjunction with a summary judgment motion.
        This standard of review is consistent with the requirement that evidence and inferences
        are viewed in favor of the nonmoving party, and the standard of review is consistent with
        the requirement that the appellate court conduct the same inquiry as the trial court.
folsom, 135 Wash. 2d at 663 (citing Lamon v McDonnell Doualas Corn., 91 Wash. 2d 345, 349, 588 P.2d
1346 (1979) and Mountain Park Homeowners Ass'n v Tvdinas 125 Wash. 2d 337, 341, 883 P.2d 1383
(1994))

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No. 74636-7-1/17

      B.     Lack of Capacity

      Hansen challenges Clarence and Barbara's capacity to enter three estate

documents: the Living Trust, the Irrevocable Trust, and the LLC. Because the standard

for determining capacity differs between testamentary and transactional documents, we

review each separately.

             1.     The Living Trust

      Because the Living Trust is a revocable trust, it requires the same capacity as

that for creating a will. RCW 11.103.020. See also UNIF. TRUST CODE § 402, 7C U.L.A.

481 (2006). "[A] person is possessed of testamentary capacity if at the time he

assumes to execute a will he has sufficient mind and memory to understand the

transaction in which he is then engaged, to comprehend generally the nature and extent

of the property which constitutes his estate and of which he is contemplating disposition,

and to recollect the objects of his bounty? In re Bottqer's Estate, 14 Wash. 2d 676, 685,

129 P.2d 518 (1942).

      "Where a will is rational on its face and is shown to have been executed in legal

form, the law presumes that the testator had testamentary capacity and that the will

speaks his wishes." Dean v. Jordan, 194 Wash. 661, 668, 79 P.2d 331 (1938). "Evidence

challenging testamentary capacity usually consists of medical testimony, testimony of

attesting witnesses, and testimony of other lay witnesses." In re Estate of Eubank, 50
Wash. App. 611, 618, 749 P.2d 691 (1988). With respect to medical testimony, special

consideration should be given to the opinion of the attending physician. Eubank, 50
Wash. App. at 618.

                                         -17-
No. 74636-7-1/18

      Rozgay offered the declaration of Clarence and Barbara's treating physician, Dr.

Henry Williams. Dr. Williams treated both Clarence and Barbara for several years. Dr.

Williams reviewed Clarence and Barbara's medical records for 2009, 2010, and 2011,

and opined:

             The medical records in 2009 show that Clarence had a mini mental
      status exam with a score of 28 out of 30, which means that he was clearly
      capable of providing informed consent, and his judgment was good. Often
      when he got sick he suffered from temporary delirium, which is a
      temporary worsening of dementia symptoms, but in between these
      episodes of delirium, and at least until the later part of 2011, he would
      return to a reasonably good cognitive function, when he could provide
      Informed consent. Barbara Rozgay had no cognitive functioning issues.

             I understand that Clarence and Barbara Rozgay executed estate
      planning documents in December 2010. Based on my recollection and
      review of his medical records, I believe that Clarence was clearly capable
      of understanding the significance of signing such documents and fully
      knew who his family members were and the scope of his assets and their
      value.

      Rozgay also offered the testimony of Clarence and Barbara's attorney Ostrem.

Ostrem testified that after the initial meeting with Clarence, Barbara, and Rozgay, he

talked with Clarence and Barbara by telephone to discuss potential changes to the

estate plan, including whether to remove Hansen as a beneficiary. Ostrem then met

with Clarence and Barbara to discuss the changes. During this second, December 4,

2010, meeting Clarence and Barbara instructed Ostrem to remove provisions for

Hansen. Ostrem further testified that when he met with Clarence and Barbara to sign

the documents on December 27, 2010, they were aware of the changes to the estate

plan and agreed to them, and that Clarence was competent, participated in the

conversation, and understood what they were discussing.

                                         -18-
No. 74636-7-1/19

       In contrast, Hansen provided deposition testimony from in-home caregiver Lisa

Baker, who described several instances of Clarence acting in a state of delirium, his

conversations not making sense, wandering out at night, and forgetting how to get

around. Another caregiver, Debbie Loveless, testified that Clarence seemed unaware

and confused. Hansen's expert, Jullie Gray, did not meet with either Clarence or

Barbara, but instead reviewed and summarized the testimony of Baker and Loveless.

Gray opined, that based on her knowledge, training, and experience, Clarence and

Barbara lacked cognitive capacity to understand the estate planning documents.

       While Hansen's evidence certainly raises a question on Clarence's capacity,

Hansen failed to meet the high burden of demonstrating that it would be "highly

probable" that she would prevail at trial. Kitsap Bank, 177 Wash. App. at 569. While it is

undisputed that Clarence did have periods of time when he was confused or even

delirious, the evidence is insufficient to prove a lack of testamentary capacity at the time

of signing the will. Neither of the caregivers testified that the parents were in a condition

of "general insanity" where they were unable to comprehend even "generally" the nature

and extent of the property. 'Failure of memory is not alone enough to create

testamentary incapacity, unless it extends so far as to be inconsistent with the 'sound

and disposing mind and memory requisite for all wills.'" In re Estate of Kessler, 95 Wn.

App. 358, 371, 977 P.2d 591 (1999) (quoting In re Denison's Estate, 23 Wash. 2d 699,

714, 162 P.2d 245 (1945)).6

        6 it must always be remembered that there is a decided difference between eccentricity, mental
peculiarities, misapprehensions, temporary or partial hallucinations on the one hand, and testamentary
capacity on the other. Many persons have been at times violently Insane, while at other times they were
mentally sufficiently normal to enjoy testamentary capacity." In re Denison's Estate, 23 Wash. 2d 699, 707,
162 P.2d 245, 249 (1945).
                                                -19-
No. 74636-7-1/20

       In light of the testimony of Clarence and Barbara's treating physician, even

viewing the evidence in the light most favorably to Hansen, we cannot find that a

rational trier of fact could find clear, cogent, and convincing evidence on each element

necessary to provide a lack of testamentary capacity. Kitsao Bank, 177 Wash. App. at

569-70 (citing Melter, 167 Wash. App. at 301).

       b.      The Irrevocable Trust and LLC

       Unlike a will or revocable trust, both the Irrevocable Trust and LLC require

general contract transactional capacity. As the comment to section 402 of the Uniform

Trust Code explains,

       [T]his section includes a capacity standard for creation of a revocable trust
       because of the uncertainty in the case law and the importance of the issue
       in modern estate planning. No such uncertainty exists with respect to the
       capacity standard for other types of trusts. To create a testamentary trust,
       the settlor must have the capacity to make a will. To create an irrevocable
       trust, the settlor must have the capacity that would be needed to transfer
       the property free of trust.

UNIF. TRUST CODE § 601 cmt., 7C U.L.A. 545 (2006).7

       The test for determining transactional capacity is similar to determining

testamentary capacity. The test of mental capacity to contract is whether "the

contractor possessed sufficient mind or reason to enable him to comprehend the nature,

terms, and effect of the contract in Issue." Page v. Prudential Life Ins. Co. of Am., 12
Wash. 2d 101, 108-09, 120 P.2d 527 (1942). Although,

        7 See generally RESTATEMENT (THIRD) OF PROPERTY: WILLS AND OTHER DONATIVE TRANSFERS § 8.1
(2003); RESTATEMENT (THIRD) OF TRUSTS § 11 (2003); RESTATEMENT (SECOND) OF TRUSTS §§ 18-22
(1959). See also Karen E. Boxx & Katie S. Groblewski, Washington Trust Laws' Extreme Makeover:
Blending with the Uniform Trust Code and Taking Reform Further with Innovations In Notice. Situs. and
Representation, 88 WASH. L. REv. 813, 886 (2013).

                                              -20-
No. 74636-7-1/21

              It is not necessary to show that a person was incompetent to
      transact any kind of business, but to invalidate his contract it is sufficient to
      show that he was mentally incompetent to deal with the particular contract
      In issue. On the other hand, to avoid a contract it is Insufficient to show
      merely that the party was of unsound mind or insane when it was made,
      but it must also be shown that this unsoundness or insanity was of such a
      character that he had no reasonable perception or understanding of the
      nature and terms of the contract. The extent or degree of intellect
      generally is not in issue, but merely the mental capacity to know the
      nature and terms of the contract.

Page, 12 Wash. 2d at 108-09.

      As with testamentary capacity, transactional capacity is a question of fact to be

determined at the time the transaction occurred. Page, 12 Wash. 2d at 109.

      Although the legal standard is higher for transactional capacity, Hansen again

failed to establish that it would be highly probable that she would prove each element by

demonstrating clear, cogent, and convincing evidence. Hansen has not presented

evidence that at the time Clarence and Barbara signed the Irrevocable Trust and LLC,

that they were mentally incompetent to deal with the particular contract at issue. The

only marginally relevant evidence was the evidence that the parents did not remember

the documents at a later time, and their accountant, Michael McAuliffe, mentioned that

Clarence was losing cognitive abilities. McAuliffe did not, however, go so far as to claim

that Clarence was unable to understand what was happening. This is still not "clear,

cogent, and convincing" evidence that they did not understand the contracts at the time.

Hansen failed to show the parents lacked contractual capacity. The trial court did not

err in dismissing both Hansen's claims of lack of capacity.

                                           -21-
No. 74636-7-1/22

3.     Undue Influence

       "'Undue influence involves unfair persuasion that seriously impairs the free and

competent exercise of judgment.'" Kitsap Bank, 177 Wash. App. at 570 (quoting In re

Estate of Jones, 170 Wash. App. 594, 606, 287 P.3d 610 (2012)). In reviewing wills and

gifts, the most important are: (1) a confidential or fiduciary relationship between the

testator and beneficiary, (2) a beneficiary's active participation in the transaction, and

(3) whether the beneficiary received an unusually large part of the estate. Kitsap Bank,
177 Wash. App. at 570-71; Melter, 167 Wash. App. at 298. The court should also consider

factors "such as age and mental or physical health of the testator, the nature of the

relationship, the opportunity for exerting undue influence, and the naturalness of the

will." Kitsap Bank, 177 Wash. App. at 571; Melter, 167 Wash. App. at 298.

       As a general rule, the party seeking to set aside an inter vivos gift, such as the

Irrevocable Trust, has the burden of demonstration that the gift was invalid. Endicott V.

Saul 142 Wash. App. 899, 922, 176 P.3d 560 (2008). "But if the recipient has a

confidential or fiduciary relationship with the donor, the burden shifts to the donee to

prove 'a gift was intended and not the product of undue influence." Endicott, 142 Wn.

App. at 922 (quoting Lewis v. Estate of Lewis, 45 Wash. App. 387, 389, 725 P.2d 644

(1986)); White v. White, 33 Wash. App. 364, 368, 655 P.2d 1173 (1982). "'[E]vidence to

sustain the gift between such persons 'must show that the gift was made freely,

voluntarily, and with a full understanding of the facts... If the judicial mind is left in

doubt or uncertainly as to exactly what the status of the transaction was, the donee

must be deemed to have failed in the discharge of his burden and the claim of gift must

be rejected.'" Endicott, 142 Wash. App. at 922 (quoting McCutcheon v. Brownfield, 2 Wn.

                                            -22-
No. 74636-7-1/23

App. 348, 356, 467 P.2d 868 (1970)). "The donee's burden of proof is by clear, cogent,

and convincing evidence." Endicott, 142 Wash. App. at 922.

      It is undisputed, and Rozgay readily admitted during oral argument, that there

was a confidential or fiduciary relationship between Rozgay and Clarence and Barbara

at the time they signed the estate planning documents. Thus, Rozgay has the burden

of demonstrating, with clear, cogent and convincing evidence, that he did not assert

undue influence over Clarence and Barbara.

      Here, it is undisputed that Rozgay provided the accountant and attorneys that

assisted his parents and was present at least at the initial meeting with the lawyer and

accountant, with some evidence that he was present at later meetings. It is undisputed

that attorney Ostrem sent the draft estate documents to Clarence and Barbara through

Rozgay. There is also evidence that Rozgay provided advice to his mother about the

Hood Canal house, including advice that they could leave Hansen out of ownership

because no one had heard from her in a while.

        It is also undisputed that Rozgay was present at the signing to answer any

questions. Finally, Rozgay's share in the Irrevocable Trust and Revocable Trust was

enhanced by Clarence and Barbara leaving Hansen out. With the removal of Hansen,

Rozgay was able to receive a larger portion of the estate, and he became the trustee

and sole manager of all of the new instruments. Finally, it is undisputed that Clarence

and Barbara were elderly, and had demonstrated a loss of memory and cognitive ability.

They clearly relied on Rozgay's expertise and connections.

       While Rozgay presented contrary evidence, it was insufficient to demonstrate

that it was "highly probable" that he would prevail at trial. We cannot find that no

                                          -23-
No. 74636-7-1/24

rational trier of fact, viewing the evidence in the light most favorable to Hansen, could

find clear, cogent, and convincing evidence to meet Rozgay's burden of demonstrating

that there was no undue influence. Kitsap Bank, 177 Wash. App. at 569-70 (citing Melter,
167 Wash. App. at 301). The trial court erred in granting summary judgment on Hansen's

claims for undue influence.

                                       Breach of Fiduciary Duty

       Hansen argues next that after the Hood Canal house was placed in the Rozgay

Irrevocable Trust, Rozgay, as trustee of the Cordes trust, used Cordes trust money to

improve the Hood Canal house. Hansen maintains that this diversion was a gift taken

from the Cordes trust that benefited Rozgay and Michael, the beneficiaries of the Hood

Canal house, to the detriment of the other beneficiaries of the Cordes trust. This,

Hansen contends, was a breach of Rozgay's fiduciary duty to the Cordes trust.

        Hansen argues that the trial court erred in granting summary judgment and

dismissing her claim that Rozgay breached his duties as trustee of the Cordes trust.

We agree.8

        The evidence offered by Hansen demonstrates that funds were drawn directly

from the Cordes trust in order to pay for Hood Canal house expenses. Rick Miller, the

accountant for the Cordes trust, expressed concern that those expenses weren't "really

shared equally by Lisa and Kim." In response, Rozgay told Miller that the repairs to the

Hood Canal house were something Barbara wanted done before transferring the house.

         • As an initial matter, the trial court's finding that Hansen lacked standing to bring a claim that
Rozgay breached his fiduciary duties as trustee for the Cordes trust was in error. For the Cordes trust,
Rozgay Is a 'beneficiary trustee.' In Washington, a beneficiary may serve as trustee, with some
limitations that are not at Issue here. See RCW 11.98.200. As a remainder beneficiary of the Cordes
trust, Hansen has standing to bring a claim that Rozgay breached his duty as trustee. See RCW
11.100.045.
                                                   -24-
No. 74636-7-1/25

In response, Miller agreed to recategorize the. expenses and treat the withdrawals "as

distributions to your Mom prior to her death, and get these out of deductible expenses."

       In support of his motion for summary judgment, Rozgay explained the use of the

Cordes trust funds for the Hood Canal house:

      While she was alive, Barbara Rozgay exclusively directed the
      expenditures of money on the Hood Canal house, as she was then a
      member of the LLC that owns the house. She paid for the roof repair,
      gutters, water line replacement, and various other maintenance items.
      (Rozgay Decl. in Opp'n to Mot. for Accounting at' 8, Dkt. 45.) Barbara
      Rozgay used the income that she received from the Cordes Family Trust
      and the Rozgay Family Trusts to pay for many of the expenses, and she
      had complete discretion to use this income in any manner she chose. (Id.)
      Mr. Rozgay signed some of Barbara's checks, but this was commonplace
      because she had a difficult time writing due to arthritis, and he was an
      authorized signer on her account for that reason. (Id.) All use of income
      was known by the Cordes Trust CPA, Rick Miller, and fully documented in
      the accountings provided to Ms. Hansen in April of 2014.

       In response, Hansen argues that Rozgay could not testify to his conversations

with Barbara supporting his transfers of Cordes Trust funds under the udeadman's

statute," RCW 5.60.030. In general, "if the person wanting to testify has an interest

adverse to the decedent's estate and the opposing party claims through the estate,

RCW 5.60.030 applies if the testimony offered involves a transaction with the deceased

or communication by the deceased to the witness or in the presence of the witness."

Thor v. McDearmid, 63 Wash. App. 193, 199, 817 P.2d 1380 (1991). The test is "whether

the deceased, if living, could contradict the witness of his own knowledge." Thor, 63
Wash. App. at 199 (citing King v. Clodfelter, 10 Wash. App. 514, 516, 518 P.2d 206 (1974)).

       Rozgay's testimony concerns uncorroborated conversations with Barbara, where

she purportedly asked him to withdraw funds from the estate to benefit a property to

which he had a future interest in. These withdrawals, if improper, would be adverse to

                                         -25-
No. 74636-7-1/26

the estate, and are certainly adverse to the other beneficiaries of the Cordes trust.

Although the statute does exclude "parties of record who sue or defend in a

representative or fiduciary capacity, and have no other or further interest in the action,"

as the claim specifically asserts Rozgay improperly withdrew funds for his own benefit,

he clearly maintains an interest in the action. RCW 5.60.030. Thus, this testimony is

inadmissible under RCW 5.60.030.

       Even considering Rozgay's testimony regarding Barbara's statements, there

remains a question of fact as to whether Rozgay breached his fiduciary duty as trustee.

Rozgay's testimony is the only evidence that Barbara wanted money transferred from

the Cordes trust to pay for repairs on the Hood Canal house. A reasonable fact-finder

could determine that Rozgay's testimony was not credible, and that he intentionally

withdrew funds from the Cordes trust to the detriment of other trustee beneficiaries.

Rozgay admitted to writing and signing Barbara's checks. And the evidence shows that

these withdrawals weren't classified as expenditures on Barbara's behalf until after she

had died. Both raise suspicion as to Rozgay's credibility. The trial court erred in

granting summary judgment and dismissing Hansen's claim that Rozgay breached his

fiduciary duty to the Cordes trust.°

                                   Order on Summary Judgment

        Hansen next challenges the form of the trial court's order granting summary

judgment. CR 56(h) provides, "[t]he order granting or denying the motion for summary

         a Hansen also claims Rozgay breached his fiduciary duties in his administration of the Irrevocable
Trust, including using his personal funds to update the Hood Canal house. Hansen admits that she Is not
a beneficiary to the Irrevocable Trusts and was not entitled to an accounting for these trusts. The trial
court did not err in dismissing Hansen's claim.

                                                 -26-
No. 74636-7-1/27

judgment shall designate the documents and other evidence called to the attention of

the trial court before the order on summary judgment was entered." Here, the order

granting summary stated only that "the Court has reviewed and considered the files and

pleadings in this case, including without limitation, the following: (1) Defendants' Motion

for Summary judgment and all supporting declarations; (2) Plaintiff Hansen's Response

to Defendant's Motion for Summary Judgment and all supporting declarations; and (3)

Defendants' Reply In Support of Defendants' Motion for Summary Judgment and all

supporting declarations." The order was deficient in failing to itemize the evidence

considered.

       While the order failed to itemize the individual declarations and evidence

considered, the evidence considered was included in the clerk's papers before us on

appeal and appears undisputed. Any error in failing to itemize evidence considered was

harmless. See W.R. Grace & Co. v. Dealt of Revenue, 137 Wash. 2d 580, 591, 973 P.2d
1011 (1999).

                                      Attorney Fees

       Hansen finally challenges the trial court's award of attorney fees and costs.

Because we reverse the trial court on at least some of Hansen's claims, and because

the trial court did not segregate the fees awarded by claim, we vacate the award of

attorney fees. The parties may seek appropriate fees and costs after trial.

                                          -27-
No. 74636-7-1/28

                                     CONCLUSION

      We affirm the trial court's decision dismissing: (1) Hansen's challenge to the

estate planning documents for lack of capacity, (2) Hansen's claim for removal of

Rozgay as attorney-in-fact for Clarence Rozgay, and (3) Hansen's claim that Rozgay

breached his fiduciary duty to the Rozgay Family trusts or LLC.

      We reverse the trial court's decision: (1) dismissing Hansen's challenge to the

estate planning documents for undue influence, (2) dismissing Hansen's challenge

because it was time barred, (3) dismissing Hansen's claim that Rozgay breached his

fiduciary duty to the Cordes trust, and (4) striking the declaration of Hansen's expert.

       We vacate the trial court's award of attorney fees.

WE CONCUR:

                                          -28-