In addition to bark, the Probate Code can have bite too. Some Probate Code sections have provisions that are punitive in nature and are designed to keep fiduciaries and others dealing with trust property in line. These statutes have sharp teeth.
Take, for example, California Probate Code section 859, which concerns property taken from a trust, an estate, a minor, an elder, or other vulnerable persons through the use of undue influence, in bad faith, or through the commission of financial elder abuse. This statute might be triggered if Junior tricked Mom into leaving him the $1.2 million family home in Granite Bay to the exclusion of Sister. In such an instance, section 859 permits the assessment of damages against the offending person in an amount double the value of the property that was taken, and allows for the court’s discretionary award of attorneys’ fees. This means that Sister might be able to recover $2.4 million against Junior along with the attorneys’ fees she spends pursuing him.
In general, punitive damages are not recoverable against a person who has passed away. Punitive damages are designed, at least in part, to punish the bad actor and to deter that individual from ever again engaging in the punished activity. Once a person dies, the deterrent factor is moot. So, if Junior passed away after Sister filed suit, she likely would not be entitled to “punitive damages.”
Despite the punitive nature of section 859 damages, the California Court of Appeal recently ruled in Hill v. Superior Court (Staggers) that these “double damages” are not technically “punitive damages” and so they are still recoverable against an individual’s estate, even after the decedent passes away.
This decision issued in February 2016 involved the estate of Senator Teresa Hughes Staggers, who served in the California State Legislature for 25 years. She was the first woman and the first African-American to serve on the Senate Rules Committee. In 1981 she married Dr. Frank Staggers, Sr. They both brought children to their marriage: he had three children and she had two. After Senator Hughes’ death in November 2011, her two children, acting as co-executors, filed suit against Dr. Staggers to recover property that allegedly belonged to their mother’s estate. As part of their Petition, the co-executors claimed that they were entitled to double damages against Dr. Staggers pursuant to section 859.
While their Petition was pending, Dr. Staggers passed away. His son, Frank Staggers, Jr., filed a motion for summary judgment in the trial court on the claim for double damages because, pursuant to Code of Civil Procedure section 377.42, punitive damages are generally not recoverable against a deceased individual. The trial court granted Frank Jr.’s motion and dismissed the co-executors’ claim under section 859.
The co-executors appealed and the Court of Appeal reversed, holding that double damages under section 859 are not “punitive damages” and may be recovered against a decedent’s personal representative or a decedent’s successor in interest on a cause of action against the decedent. The Court of Appeal drew a distinction between punitive damages, which tend to be “in an arbitrary sum irrespective of actual damage suffered,” and statutory damages, which are a multiple of the actual amount of damage proved. The Court of Appeal concluded that the double damages provided for under section 859 are statutory damages, and not punitive damages, and therefore can still be recovered against a personal representative of a decedent, based on the decedent’s conduct.
Furthermore, the Court of Appeal clarified that to recover double damages under section 859 there is no need to show “oppression, fraud, or actual malice” and that the standard of proof is merely a preponderance of the evidence (i.e., 51%), whereas a plaintiff typically needs to show an entitlement to punitive damages by “clear and convincing evidence.”
The Court of Appeal ruling is significant because the enticement of double damages and/or attorneys’ fees under section 859 is sometimes a motivation for filing a petition under Probate Code section 850 to recover assets that should belong to a trust. Now, the Court of Appeal has clarified that the mere death of the wrongdoer does not impair a beneficiary or other wronged party from recovering the damages provided for in section 859.
The ruling also likely applies to other provisions of the Probate Code that provide for quasi-punitive remedies that are based on a set formula, including Probate Code section 4231.5, which authorizes an award damages in an amount of twice the value of property taken from a principal in bad faith under a power of attorney.
Trust beneficiaries need to be aware of what remedies they may be entitled to as a result of wrongs committed by a trustee, just like trustees need to know the importance – and potential consequences – of their actions. This Court of Appeal decision provides more guidance on these issues.