Tuesday, February 12, 2013
Blair J. Berkley (Professor of management, California State University) recently published her article entitled Canceling Deeds Obtained Through Fraud and Undue Influence, 39 W. St. U. L. Rev. 129 (2012). The introduction to the article is below:
This article addresses the common family situation when an elder has a long-standing will or trust leaving his or her real estate in equal shares to his or her children. When the elder becomes infirm, one of the children (or other relative or friend) moves in with the elder to provide care and companionship. The elder then executes a deed conveying all or most of his or her real estate to the caregiver and the other children sue to cancel the deed.
For example, in Seanez v. Seanez, Manuela Seanez ("Manuela") had four children: plaintiff Jose Seanez ("Plaintiff"), defendant Maria Del Carmen Seanez ("Carmen"), and third parties Victor Seanez and Cristina Seanez. In 2000, Manuela executed an inter-vivos trust ("Trust") and a pour-over will. The Trust names Plaintiff as successor trustee and directs Plaintiff to distribute Trust assets in equal shares to Carmen, Cristina, Victor, and Plaintiff. On January 24, 2001, Manuela purchased a new house in Ontario, California ("House") and took title to the House as trustee of Trust. Carmen seldom saw Manuela at the House and remained somewhat estranged from Manuela following a dispute in the 1970's.
In 2006, Manuela's health began to decline. She complained of extreme weakness and a sudden loss of memory. In February 2007, she was diagnosed as having myasthenia gravis. In July 2007, Manuela began to complain of excruciating sinus and facial pain. By January 2008, Manuela was no longer able to care for herself and required constant attention and assistance. On June 9, 2008, Manuela was diagnosed as having squamous cell cancer of the nasopharynx. In June and July 2008, she suffered several seizures which her physicians attributed to neurological damage and cancer involvement in the brain. Her neurologist found her to have compromised memory and limited orientation.
Carmen saw Manuela's terminal illness and mental and physical weakness as an opportunity to take the House for herself. Hence, on June 14, 2008, Carmen moved into the House to provide care and companionship, assumed control of Manuela's financial affairs, and established a confidential relationship with Manuela. Manuela added Carmen to her checking account and Carmen paid all of Manuela's bills with funds in the checking account. As the only child of Manuela living in the House, Carmen had an exclusive opportunity to influence and importune Manuela. Carmen represented to Manuela that she needed In-Home Supportive Services (in-home nursing) and that she could not qualify for such public assistance if she owned a home.
Carmen hired a notary public and procured a deed. On the evening of July 9, 2008, while Plaintiff, Cristina, and Victor were not present at the House, Carmen secretly, through fraud and undue influence, and as a proximate result of Manuela's mental and physical weakness and susceptibility to influence, caused Manuela to execute a grant deed ("Deed") conveying the House to Carmen. Carmen paid no consideration for the House and Manuela had no independent legal advice before executing the Deed. Carmen concealed the executed Deed from Plaintiff, Cristina, and Victor and isolated Manuela from her family and friends. Following Manuela's death on November 8, 2008, Plaintiff sued Carmen to cancel the Deed and argued the Deed was a product of fraud and undue influence.
The purpose of this article is to review the common law regarding cancellation of deeds and to present the presumptions, circumstances, and evidence that courts use to determine whether deeds were the product of fraud or undue influence. The next section gives several available presumptions. Sections III and IV give the circumstances that suggest the presence or absence of fraud and undue influence. Sections V and VI review applicable evidence law and available remedies. Bankruptcy issues and estate-planning recommendations are given in sections VII and VIII.