Trusts and Estates

Estate of Ashlock

Cite as F078083
Filed March 3, 2020, Fifth District

By Matt Owens
Withers Bergman LLP
www.withersworldwide.com

Headnote: Damages – Calculation Under Probate Code Section 850 et seq.

Summary: A person who misappropriates estate property in bad faith must return the property, plus pay twice the property’s value as a separate penalty.

After Lonnie died in 2013, Stacey and Gabriel engaged in extensive litigation over her estate, including a 53-day bench trial.  Stacey was ultimately found liable under Probate Code 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 Probate Code section 856, plus pay the estate twice the value of the misappropriated property, approximately $10 million, under Probate Code section 859.  Stacey appealed.

The court of appeal affirmed.  In cases of bad faith misappropriation, Probate Code section 859 imposes a penalty of “twice the value of the property recovered,” which is in addition to recovery of the misappropriated property under Probate Code section 856.  The penalty under Probate Code section 859 does not get merged with the recovery under Probate Code section 856.  Stacey argued this interpretation of the statute effectively resulted in triple damages instead of double damages, a result that conflicted with the Fourth District Court of Appeal case of Conservatorship of Ribal, which capped damages under Probate Code section 850 et seq. at double damages.  But the appellate court expressly disagreed with Conservatorship of Ribal and instead followed the Second District Court of Appeal case of Estate of Kraus, which permitted recovery of the misappropriated property, plus twice its value.  Since Stacey misappropriated approximately $5 million of estate property in bad faith, the estate was entitled to recovery of that property, plus twice its value. 

http://www.courts.ca.gov/opinions/documents/F078083.PDF

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