Court Opinion

ID: 9297673
Source: CourtListenerOpinion
Date Created: 2022-11-30 23:01:29.667119+00
Date Added: 2024-06-11T17:13:29.278958
License: Public Domain

Filed 11/30/22 Gaines v. Longwood 18 CA2/8
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                         SECOND APPELLATE DISTRICT
                                      DIVISION EIGHT

Estate of FANNIE MARIE                                              B311210
GAINES, Deceased.
_________________________________                                  Los Angeles County
MILTON H. GAINES, as                                               Super. Ct. No. BP121586
Administrator, etc.,

         Petitioner and Respondent,

         v.

LONGWOOD 18, LLC,

         Objector and Appellant.

      APPEAL from an order of the Superior Court of Los
Angeles County. Ana Maria Luna, Judge. Reversed.
      The Ryan Firm, Timothy M. Ryan, Andrew J. Mase, Elle M.
Reed and Logan W. Hensley for Objector and Appellant.
      Ivie McNeill Wyatt Purcell & Diggs and Lilia E. Duchrow
for Petitioner and Respondent.
                   __________________________
                             SUMMARY
        The probate court issued an order permitting the sale of
real property without first finding the property was an asset of
the probate estate, and in the face of claims by an objector, who
held a recorded quitclaim deed to the property, that the objector
owned the property. Because the probate court had no power to
order the sale of property that was not an estate asset, we reverse
the court’s order authorizing the sale.
                               FACTS
1.      The Background
        The probate proceedings in this case began in 2010. Other
civil litigation concerning the real property that is the subject of
the probate court’s order began in 2006 and continues today. We
recite the undisputed background facts, some of them taken
directly from a previous opinion in the civil litigation. (Gaines v.
Lehman Bros. Holdings, Inc. (Jan. 29, 2020, B292497) 2020
Cal.App.Unpub.Lexis 660 (Gaines I).)
        In 2006, homeowners Fannie Marie and Milton Gaines fell
behind on mortgage payments on their duplex on Longwood
Avenue (the Longwood property) and went into foreclosure. They
sought help from Countrywide Home Loans, their lender. A
Countrywide employee lied to them that Countrywide could not
refinance their loan, and then referred them to her fiancé Joshua
Tornberg for help. Tornberg and others deceived Fannie and
Milton into transferring title to their property to Tornberg in a
leaseback scenario Tornberg never intended to honor. Tornberg
took out a loan against the property that was eventually held by
Lehman Brothers Holdings, Inc. (Lehman).
        Milton died, and Fannie filed a lawsuit against those
involved in the transaction, alleging causes of action for fraud,

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cancellation of the deed to Tornberg, quiet title, and others.
Counsel recorded notices of lis pendens as to the Longwood
property in 2006 and 2007. After years of procedural wrangling,
during which Fannie died and her son Milton Howard Gaines
(Gaines or petitioner) stepped in as plaintiff, in 2012 Tornberg
and other defendants were dismissed for Gaines’s failure to bring
the case to trial within five years. That ruling was upheld by the
Supreme Court in 2016. (Gaines v. Fidelity National Title Ins.
Co. (2016) 62 Cal.4th 1081.) Because Lehman was added to the
suit later than the dismissed defendants, Lehman remained the
sole defendant.
       After a bench trial in June 2017, the trial court entered
judgment on July 9, 2018, quieting title to the Longwood property
in Gaines’s favor, cancelling the warranty deed from Fannie and
Milton to Tornberg, and cancelling Lehman’s deed of trust
against the property.
       Lehman appealed, contending (among other things) the
trial court improperly adjudicated Tornberg’s title to the property
even though he was no longer a defendant. This court found no
error on that ground. We explained that, as a nonparty,
“Tornberg could not be bound by the judgment as to the validity
of his title, but the court could still make findings as to
Tornberg’s title in order to adjudicate the validity of Lehman’s
title.” (Gaines I, supra, 2020 Cal.App.Unpub.Lexis 660, p. *10.)
We observed that, as the trial court correctly understood, Gaines
might be exposed to a future quiet title action by Tornberg
because Tornberg was not bound by the judgment quieting title
in Gaines’s favor. (Id. at p. *13.) We also concluded the court
sitting in equity should have required Gaines to pay back benefits

                                3
Fannie and Milton received from the Tornberg transaction. (Id.
at p. *27.)
       Consequently, in Gaines I we conditionally affirmed the
judgment quieting title for Gaines and canceling the warranty
deed and Lehman’s deed of trust, but modified it to add this
condition: Gaines must repay the benefits received by Fannie
and Milton between a minimum of $567,955.96, representing the
amount used to pay off the delinquent Countrywide loan, and
$854,647.93, the full amount of the benefits Fannie and Milton
received in the Tornberg transaction, with the amount to be
determined by the trial court. We further modified the judgment
to provide if Gaines failed to satisfy the condition of paying the
amount ordered by the trial court, the trial court must enter
judgment for Lehman.
       On September 16, 2020, the trial court entered the second
amended judgment. That judgment modified the July 2018
judgment as we directed, adding the condition that Gaines repay
to Lehman $567,955.96 within 180 days from entry of judgment,
failing which the court would enter judgment for Lehman. Thus
Gaines’s deadline for repayment was March 15, 2021.
2.     The Probate Proceedings
       After Fannie died in 2009, Gaines was appointed
administrator of her probate estate.
       In October 2020, Gaines filed a petition seeking an order
confirming sale of the Longwood property to EWA Holdings LLC
for $1,070,000. Gaines wanted to sell the Longwood property to
generate the funds to make the $567,955.96 payment to Lehman
required by the second amended judgment. The matter had been
set for a date shortly before Gaines’s payment was due, so Gaines
sought to advance the hearing date.

                                4
       Lehman filed a “limited response” telling the court that,
because Tornberg was not bound by the judgment and had
transferred the property to Longwood 18, LLC (Longwood 18 or
objector) by a deed recorded June 20, 2017, Longwood 18, not
Gaines, “remains the record owner of the property.”
       Several probate hearings ensued. On December 14, 2020,
the court found additional evidence was required before it could
grant Gaines’s petition, and required written objections by
December 31, 2020. Lehman and Longwood 18 filed objections,
contending the petition misrepresented the condition of title to
the property and that granting the petition would allow the
estate “to sell something it does not own.” Longwood 18 asked for
judicial notice of several documents, including its quitclaim deed
from Tornberg dated July 13, 2016, and recorded June 20, 2017.
       Gaines’s response included a recitation of the findings in
the second amended judgment to the effect that the 2006
warranty deed to Tornberg was void and unenforceable; that
Tornberg never obtained a lawful interest in the Longwood
property as a consequence of the fraudulent 2006 sale
transaction; that Lehman was not a bona fide encumbrancer, and
so on.
       A short hearing on January 13, 2021, was continued to
February 17, 2021. At the February 17, 2021 hearing, the
probate court took judicial notice of the second amended
judgment and this court’s opinion in Gaines I; overruled the
Lehman and Longwood 18 objections; found sufficient evidence
was provided to grant Gaines’s petition; and confirmed the sale in
the amount of $1,070,000. The probate court ordered Gaines’s
counsel to prepare an order confirming the sale.

                                5
      The following day, Longwood 18 filed a notice of appeal of
the probate court’s February 17, 2021 order.
3.    Events After the February 17, 2021 Hearing
      Counsel for Gaines prepared a proposed order confirming
sale of the property and on March 1, 2021, filed an ex parte
application to shorten time for hearing on the proposed order,
and on two other requested orders: an order instructing Gaines
to complete the sale, and an order directing Gaines, under
Probate Code section 1310, subdivision (b), to complete the sale
“notwithstanding any appeal that is or may be taken of the Order
confirming sale of the [Longwood] property and instructing
[Gaines] with respect to the sale.”1
      The court set a hearing for March 9, 2021, indicating its
intent to grant the request to sign the proposed order confirming
the sale “as this will likely be necessary for the appeal to be
perfected.”
      At the March 9, 2021 hearing, the court confirmed the sale,
and executed and entered an order to that effect. The court
continued the hearing to March 19, 2021, and allowed briefing, to
consider Gaines’s other requests. After the March 19, 2021

1      “Section 1310, subdivision (b) allows a probate court to
‘direct the exercise of the powers of the fiduciary’ for the purpose
of ‘preventing injury or loss to a person or property’ while an
appeal is pending.” (East Bay Regional Park Dist. v.
Griffin (2016) 2 Cal.App.5th 734, 741, quoting Prob. Code, § 1310,
subd. (b).) “All acts of the fiduciary pursuant to the directions of
the court made under this subdivision are valid, irrespective of
the result of the appeal. An appeal of the directions made by the
court under this subdivision shall not stay these directions.”
(§ 1310, subd. (b).)

                                 6
hearing, the court overruled objections by Lehman and by
Longwood 18 and entered the requested orders, directing Gaines
pursuant to Probate Code section 1310, subdivision (b), to
complete the sale “as provided in the Court’s order confirming the
sale notwithstanding any appeal that has been, or may be, taken
of the order confirming sale of the subject property.”
       Meanwhile, in the civil litigation, the court extended the
deadline set in the second amended judgment for Gaines’s
repayment to Lehman. We grant Longwood 18’s request for
judicial notice of the fourth amended judgment, entered May 24,
2021, and of Lehman’s notice of appeal from that judgment.2
       The fourth amended judgment modified the judgment to
extend Gaines’s deadline for repayment until two months after
resolution of a quiet title action Longwood 18 filed on March 17,
2021. The judgment states the trial court found “the quiet title
action is precluding the completion of the sale of the property”
that was ordered by the probate court on March 19, 2021. The
judgment further states that during the pendency of the
Longwood 18 quiet title action, the court would retain jurisdiction
to make further orders regarding the deadline for Gaines’s
payment “as fairness and equity may dictate.”

2     The fourth amended judgment shows that the second
amended judgment had previously been modified to extend the
time for repayment to May 26, 2021.

                                 7
                               DISCUSSION
       Longwood 18 contends the probate court exceeded its
authority by ordering the sale of property when the estate did not
and could not establish its ownership of the property. We agree.
Our conclusion flows from several pertinent principles.
       First, it is not open to dispute that “[t]he power of the
probate court extends only to the property of the decedent.”
(Estate of Lee (1981) 124 Cal.App.3d 687, 692.)
       Second, Longwood 18 holds a quitclaim deed to the
property, recorded on June 20, 2017. The deed shows Tornberg
transferred the property to Longwood 18 on July 13, 2016.
       Third, Tornberg was not a party to the civil action quieting
title to the property in Gaines. As we said in Gaines I, “[a]s a
non-party, Tornberg could not be bound by the judgment as to the
validity of his title . . . .” (Gaines I, supra, 2020
Cal.App.Unpub.Lexis 600, p. *10, italics omitted.) Consequently,
he was free to transfer his interest in the property to Longwood
18, as he did.
       Fourth, the judgment we affirmed in Gaines I, quieting title
in Gaines’s favor so far as Lehman’s security interest was
concerned, was expressly conditioned on Gaines’s repayment of
benefits he received in the fraudulent Tornberg transaction.
Failing that repayment, our disposition directed that “judgment
must be entered for Lehman.” (Gaines I, supra, 2020
Cal.App.Unpub.Lexis 660, p. *31.)
       Gaines has not made the necessary repayment. Until the
repayment is made, the trial court’s equitable findings in
Gaines’s favor in the second amended judgment (and the
amended judgments thereafter) are a nullity. Gaines must do

                                8
equity (repay the benefits he received) in order to receive equity
(title to the Longwood property).
        These points lead to only one conclusion: Gaines (the
estate) does not presently have title to the property. That
necessarily means the probate court does not have the authority
to order the sale of the property. (Estate of Lee, supra,
124 Cal.App.3d at p. 692.)
        Accordingly, we follow the law when we hold the probate
court had no authority to order a sale of property to which the
estate does not hold title. At this time, the title holder of record
is Longwood 18.
        Nor do we view our holding as inequitable. As we observed
in Gaines I, Gaines’s parents received $854,647.93 in benefits in
the Tornberg transaction. (Gaines I, supra, 2020
Cal.App.Unpub.Lexis 660, p. *27.) That included (in addition to
the $567,955.96 the trial court on remand ordered Gaines to
repay by March 15, 2021) $4,221.65 in real estate taxes;
$279,930.32 paid to Gaines’s parents in cash; and $2,500 in funds
advanced to Gaines’s parents during escrow.3 (Id. at p. *26.)
And, according to the trial court’s statement of decision in the
Gaines I case, Lehman noted that “ ‘[Gaines] and his parents,
prior to the death of his parents, lived in the Longwood property
for more than ten years without making mortgage payments,
prior to the time the disputed loan was paid off by Lehman’s
assignor.’ ” (Id. at p. *22.) These benefits do not wipe out the
damage done by the fraud, but they put the equities in a different
light. And in that light, we will not affirm an order for sale of
property that is not now property of the estate.

3     There appears to be a $40 discrepancy in the addition of
these amounts.

                                 9
       In his respondent’s brief, petitioner states, without
discussion of relevant authority, that the Longwood property is
property of the estate. For this he cites only the second amended
judgment and our opinion in Gaines I. But as we have shown,
the judgment quieting title in petitioner was expressly
conditioned on his return of the benefits his parents received, and
Longwood 18 remains the record title owner. As a matter of law,
the estate does not now have title to the property, and the
probate court therefore had no authority to order it sold.
                          DISPOSITION
       The order is reversed. The cause is remanded to the
probate court with instructions to vacate its order and to enter a
new order denying Gaines’s petition for an order confirming sale
of the Longwood property. Longwood 18 shall recover its costs on
appeal.

                              GRIMES, J.

      WE CONCUR:

                        STRATTON, P. J.

                        WILEY, J.

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