Seeing triple under Probate Code 859 ‘double damages’

Twice in two years California appellate courts have addressed the proper construction of Probate Code Section 859 on the award of "double damages" with each court reaching a different conclusion. In the case Estate of Ashlock, 2020 DJDAR 1950 (March 3, 2020), the 5th District Court of Appeal held Section 859 is to construed as "double damages" awarded in addition to recovery of the initial asset at issue. To contrast, the 4th District held in the case of Conservatorship of Ribal, 31 Cal. App. 5th 519 (2019), "double damages" under Section 859 mean double and not triple as now construed by the 5th District.

The language of Section 859 is deceptively simple. Section 859 states, in relevant part, "If a court finds that a person has in bad faith wrongfully taken, concealed, or disposed of property belonging to a conservatee, ... a trust, or the estate of a decedent ... the person shall be liable for twice the value of the property recovered by an action under this part" (emphasis added). Section 859 clarifies that the "remedies provided in this section shall be in addition to any other remedies available in law to a person authorized to bring an action pursuant to this part."

Ashlock was a probate matter involving a trust dispute, a will contest, and claims against Stacey Carlson for breach of fiduciary duty and financial abuse of a dependent adult heard in a 53-day bench trial. Stacey was ultimately found liable under Section 859 for having misappropriated estate property in bad faith. The value of the misappropriated property was approximately $5 million, so the trial court ordered her to return that property under Section 856, plus pay the estate twice the value of the misappropriated property, approximately $10 million, under Section 859. Stacey appealed based on the insufficiency of the evidence. On appeal, the trial court's ruling was affirmed.

In affirming the calculation of an award under Section 859, the Ashlock appellate court explained that the property returned pursuant to Section 856, approximately $5 million from Stacey, does not include the additional award under Section 859 of twice the value of the property taken, an additional $10 million from Stacey in this case.

This statutory construction follows precedent from the 2nd District case of Estate of Kraus, 184 Cal. App. 4th 103 (2010), which permitted recovery of the misappropriated property plus twice its value.

The Ashlock opinion expressly distinguishes the statutory construction in the case of the Ribal, decided in 2019. Ribal involved a domestic partner wrongfully taking funds from the conservatorship estate. There, the court found that Section 859 was applicable, as the taking was in bad faith. The value to be paid back to the estate was twice the value of the property that was taken. In essence, double damages. If $1,000 were taken, Ribal states that $2,000 would be paid back. When the statute states that "the personal shall be liable for twice the value of the property," this outcome seems to make perfect sense. The court disagreed with the respondent conservator who stated that the value returned to the conservatorship estate was the mere recovery of the property and the damages imposed by Section 859 were a penalty of twice the value on top of the actual recovered property. The Ribal court stated that this view would be treble damages, and if the legislature intended treble damages, the statute would say so.

The Ashlock court reviewed the Ribal holding in great detail and turned to the statutory scheme of Sections 850 et seq. as a whole. The Ashlock court discusses how, in an action under Probate Code Section 856 to have wrongfully taken property returned to an estate by court order, Section 859 serves as a calculation of additional punitive damages. Ribal holds that the compensatory damages (the return of the property or its value) under Section 856 is subsumed by Section 859 with the double damages. But the Ashlock court used the following hypothetical to illustrate the folly of Ribal's reasoning:

"Assume a petitioner's action under section 850 et seq. alleges the misappropriation of a diamond ring valued at $10,000. The probate court finds the petitioner is entitled to the ring and, pursuant to section 856, orders that it be returned. The petitioner is then deemed to have 'recovered' the property for purposes of Section 859 -- even if the actual conveyance is yet to occur. If the petitioner can show the opposing party acted in bad faith, the probate court must impose a penalty under Section 859 because the statue says 'the person shall be liable for twice the value of the property recovered.' Consequently, the opposing party must return the ring and pay $20,000." (Citations omitted.)

Viewed this way, Ribal's reasoning is clearly faulty. The troubles come, of course, when the property wrongfully taken is cash, as in Ribal, and not something tangible to be returned, like jewelry, as in Ashlock's illustrative example, or even title to real property. Regardless of the form of asset, the same principles still apply under Section 859 damage calculations.

Additionally, though the issue of calculation of the award under Section 859 will no doubt increase litigation on the issue in the future, not every action brought under Sections 850 et seq. triggers a damage award under Section 859. The statute specifically states that there must be a finding of bad faith. The Legislature's inclusion of that terminology indicates that not every case of undue influence or elder abuse or wrongful taking from an estate is eligible for the Section 859 penalty. Levin v. Winston-Levin, 39 Cal. App. 5th 1025 (2019).

Ashlock presents the better reasoned and more logical interpretation of Section 859 than Ribal. The problem now exists in this split of authority and potential confusion with stare decisis. Decisions by any and every division of every appellate district court in California are binding on all superior courts in California. Auto Equity Sales, Inc. v. Superior Court of Santa Clara County, 57 Cal. 2d 450, 455 (1962). Ribal and Ashlock were decided by different districts and quite clearly conflict. In cases of such conflict, lower courts must choose between conflicting decisions. Id. at 456. Courts of Appeal, however, are not bound by the decisions by other divisions or districts (Sarti v. Salt Creek Ltd., 167 Cal. App. 4th 1187, 1193-94 (2008)), and even the same division or district is not bound by its own prior decisions (Saucendo v. Mercury Sav. & Loan Assn., 111 Cal. App. 3d 309, 315 (1980).

To have a uniform decision of the proper calculation of an award under Section 859, the California Supreme Court will need to hear and decide a case on the issue to settle the growing split of authority. Until such time, probate litigation dealing with Section 859 will be a battleground for the Ribal versus Ashlock calculations. 