The opinion
Filed 9/11/24 Brown v. Kingan CA4/3
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION THREE
ROBERT A. BROWN et al.,
Plaintiff and Appellants, G062611
v. (Super. Ct. No. 30-2020-
01173623)
REIKO KINGAN et al.,
OPINION
Defendants and Respondents.
Appeals from a judgment and order of the Superior Court of
Orange County, Sheila Recio, Judge. Affirmed in part and reversed in part.
Law Offices of Robert A. Brown and Robert A. Brown, in pro.
per., and for Plaintiff and Appellant Kurt Hughes.
Webb Law Group, Lenden F. Webb and Katherine E. Cervantes
for Defendants and Respondents.
Plaintiff Kurt Hughes filed a complaint against defendants Reiko
Kingan and Charles Kingan (collectively, Kingan defendants), among others,
related to the Kingan defendants allegedly improperly taking the proceeds
from the sale of a property that had been owned by plaintiff’s deceased
mother, Midori Hughes. The trial court sustained a demurrer with leave to
amend for failure to state a cause of action. Plaintiff filed a first amended
complaint (FAC), but the trial court again sustained a demurrer with leave to
1
amend. The trial court found the probate court had exclusive jurisdiction.
Plaintiff then filed a second amended complaint (SAC), asserting
causes of action against the Kingan defendants for statutory civil liability for
theft under Penal Code sections 484 and 496, subdivision (c), and voidable
transfer under Arizona Revised Statutes section 44-1001 et seq. The trial
court sustained a demurrer as to the voidable transfer cause of action,
concluding it failed to state a cause of action and, additionally, should have
been filed in probate court. The trial court granted a motion to strike as to
the statutory theft cause of action—which was not asserted in the initial
complaint—finding the scope of leave to amend did not encompass adding
that cause of action. We agree with the trial court that the voidable transfer
cause of action failed to state a cause of action and the statutory theft cause
of action was properly stricken. Thus, we affirm the judgment of dismissal.
The trial court also ordered plaintiff’s counsel, appellant Robert
A. Brown, to pay $17,702.50 as monetary sanctions pursuant to Code of Civil
1
“Technically, California does not have ‘probate courts.’ ‘The
term “probate court” is but a convenient way of expressing the concept of a
superior court sitting in exercise of its probate jurisdiction. This is but a
colloquial expression . . . .’ [Citation.]” (In re Michael R. (2006) 137
Cal.App.4th 126, 131, fn. 1 (Michael).)
2
2
Procedure section 128.7. The trial court concluded pleading the voidable
transfer cause of action in the SAC “was objectively unreasonable and no
reasonable attorney would have simply repeated claims that the court had
already determined to be beyond its jurisdiction.” However, we conclude the
jurisdictional issue was not frivolous. Therefore, we reverse the order
awarding monetary sanctions against Brown.
FACTUAL AND PROCEDURAL BACKGROUND
In December 2020, plaintiff filed his initial complaint against the
3
Kingan defendants and certain other defendants. Among other things, the
complaint alleged that on or about October 20, 2018, the real estate
defendants entered into a listing agreement with the Kingan defendants to
sell a property. The listing agreement allegedly was entered into on the basis
that Reiko Kingan and/or Charles Kingan was a trustee of a trust for Midori
Hughes, but record title was purportedly vested with Midori Hughes, not the
Kingan defendants. According to the complaint, Midori Hughes died on
October 22, 2018. The complaint asserts the Kingan defendants received
$245,619.15 in net proceeds from the sale of the property. The complaint
asserted three causes of action against the Kingan defendants: (1) conversion,
(2) breach of fiduciary duty, and (3) voidable transfer pursuant to Arizona
Revised Statutes section 44-1001 et seq. The trial court sustained the Kingan
2
All further statutory references are to the Code of Civil
Procedure unless otherwise indicated.
3
The other defendants were Tiffany Torgan Philips; Prestige
Properties Enterprises, Inc., doing business as Harcourts Prestige Properties;
and Lindsey Jean-Marie Gates (collectively, real estate defendants). This
court previously granted appellants’ request to dismiss the real estate
defendants. A claim was also asserted against Alliance Escrow, Inc. in the
initial complaint and the FAC but not the SAC.
3
defendants’ demurrer to those causes of action for failure to state a cause of
action.
Plaintiff then filed his FAC, which asserted three causes of action
against the Kingan defendants, among others. As to the Kingan defendants,
the FAC again asserted causes of action for conversion and voidable transfer
pursuant to Arizona Revised Statutes section 44-1001 et seq., but it asserted
a cause of action for statutory civil liability for theft under Penal Code
sections 484 and 496, subdivision (c), instead of breach of fiduciary duty.
Among other things, the FAC attached documents entitled “Last Will and
Testament of Midori Hughes” and “Trust Agreement The Midori Hughes
Trust[,]” and it alleged plaintiff had an equitable right to at least one-third of
the net proceeds from the sale of the property because he is either a
beneficiary of the trust or an heir under the will, or by intestate succession.
The trial court sustained the Kingan defendants’ demurrer to the
three causes of action asserted against them and concluded, among other
things, the probate court had exclusive jurisdiction. The trial court permitted
plaintiff to file an amended complaint and stated plaintiff “is reminded that
leave to amend is limited to the issues addressed in this ruling. Plaintiff must
bring a motion for leave to amend if he seeks to add new causes of action.”
Plaintiff proceeded to file his SAC. The SAC removed the
allegations expressly referencing the trust and estate, and it did not attach
the documents entitled “Last Will and Testament of Midori Hughes” and
“Trust Agreement The Midori Hughes Trust”. As to the Kingan defendants,
the SAC asserted causes of action for statutory civil liability for theft under
Penal Code sections 484 and 496, subdivision (c), and voidable transfer
pursuant to Arizona Revised Statutes section 44-1001 et seq.
4
The Kingan defendants filed a demurrer to the voidable transfer
cause of action. They argued the probate department had exclusive
jurisdiction and the voidable transfer cause of action failed to state a cause of
action. The Kingan defendants also filed a motion to strike both causes of
action. Specifically, they argued the statutory theft cause of action exceeded
the scope of leave to amend, and the voidable transfer cause of action was
materially changed by omitting any mention of the will and trust and the
omission rendered the SAC inconsistent with the FAC.
The trial court sustained the demurrer to the voidable transfer
cause of action with 15 days leave to amend and granted the motion to strike
the statutory theft cause of action. The trial court sustained the demurrer to
the voidable transfer cause of action because (1) it failed to state a cause of
action, and (2) “[p]laintiff has simply omitted factual allegations from the
[FAC] that reveal that [his] claims should have been filed in the probate
court.” The trial court granted the motion to strike as to the statutory theft
cause of action, concluding “the scope of leave to amend did not encompass
the statutory theft claim that was added to the FAC and SAC without leave
of court” and “[p]laintiff added a new cause of action that changed the
underlying obligation from one that arises from fiduciary duties to one that
arises from the Penal Code.”
The Kingan defendants also moved for sanctions under section
128.7, seeking non-monetary sanctions and monetary sanctions of $73,054.
The trial court granted in part and denied in part the sanctions motion. The
trial court found the request for non-monetary sanctions to be moot.
Regarding monetary sanctions, the trial court noted it could not
say the filing of the initial complaint and the FAC violated section 128.7. But
the trial court found, “in filing the SAC and repeating claims that the court
5
had already ruled were not within its jurisdiction, [p]laintiff violated the
certification of [s]ection 128.7 that the SAC was ‘warranted by existing law or
by a nonfrivolous argument for the extension, modification, or reversal of
existing law or the establishment of new law.’ Pleading the second cause of
action was objectively unreasonable and no reasonable attorney would have
simply repeated claims that the court had already determined to be beyond
its jurisdiction.” The trial court further noted, although not required, a
showing of subjective bad faith “can be made in this case” because, “rather
than amending the allegations to show that [p]laintiff’s claims were properly
before this court, [p]laintiff only removed material allegations that showed
that [his] claims belonged before the probate court. This indicated that
[p]laintiff understood the court’s prior ruling and was trying to avoid it by
sham pleadings rather than proper amendments.” However, regarding the
motion to strike the statutory theft cause of action, the trial court noted,
among other things, “[p]laintiff cited to case law that reasonably could be
read to support his position.”
Thus, the trial court concluded the Kingan defendants were
“entitled to monetary sanctions for fees and costs expended as a result of the
filing of the second cause of action of the SAC[,]” which included fees and
costs expended after July 21, 2022, and regarding the demurrer to the SAC
but not the motion to strike. The trial court continued the hearing “to allow
the parties to submit their evidence and argument regarding whether
attorney’s fees and costs were expended after [July 21, 2022], whether they
were expended for the demurrer to the SAC, and whether they were
reasonable.”
The parties subsequently made additional filings, which included
the Kingan defendants seeking a revised amount of “$35,088.00 in attorneys’
6
fees and $2,187.00 in costs associated [with] the demurrer and Motion to
Strike as to the [SAC.]” On March 3, 2023, the trial court found “$17,702.50
4
to be an appropriate sanction amount to deter future misconduct.”
On April 3, 2023, the trial court granted an ex parte application
by the real estate defendants (which the Kingan defendants joined) to dismiss
the action under section 581(f)(2) and dismissed the action with prejudice.
Plaintiff and Brown filed notices of appeal from the order
awarding monetary sanctions,5 and plaintiff filed a notice of appeal from the
judgment of dismissal.
DISCUSSION
Plaintiff argues the SAC’s causes of action for voidable transfer
and statutory theft are viable and the trial court had jurisdiction. But we
prefer to decide the case on the merits of the demurrer. We conclude the trial
court correctly sustained the demurrer because the voidable transfer cause of
action failed to state a cause of action and granted the motion to strike
because the statutory theft cause of action was not encompassed by the leave
to amend. Regarding monetary sanctions, we conclude the jurisdictional issue
was not frivolous, and thus, the trial court erred in awarding monetary
sanctions.
4
The Kingan defendants state the sanctions amount was
imposed jointly and severally against plaintiff and Brown. However, the
sanctions amount was imposed only against Brown. The trial court stated
“Plaintiff Kurt Hughes’ attorney of record, Robert A. Brown, to pay the sum
of $17,702.50 to moving defendants within 30 days of notice.”
5
We dismiss plaintiff’s appeal as to the order awarding monetary
sanctions against Brown because plaintiff “has no standing to challenge the
order directing [his] counsel to pay sanctions.” (McCluskey v. Henry (2020) 56
Cal.App.5th 1197, 1201, fn. 2.)
7
I.
DEMURRER
As an initial matter, the Kingan defendants argue an abuse of
discretion standard of review applies because plaintiff failed to timely file an
amended pleading and the trial court dismissed the action under section
581(f)(2). According to the Kingan defendants, “[t]his is an important
distinction as it changes the standard of review for the instant [a]ppeal” such
that abuse of discretion applies instead of de novo.
The Kingan defendants’ argument is misplaced. Plaintiff is not
arguing the trial court erred by refusing to allow him to file an untimely
amended complaint and dismissing the action under section 581(f)(2).
Instead, plaintiff is challenging the validity of the trial court’s order
sustaining the demurrer and granting the motion to strike. “When, as here, a
demurrer to a complaint is sustained with leave to amend and the plaintiff[]
elect[s] not to amend the complaint, the plaintiff[] may test the validity of the
order sustaining the demurrer by appealing from the ensuing judgment of
dismissal.” (Shaw v. Los Angeles Unified School Dist. (2023) 95 Cal.App.5th
740, 753 (Shaw).)
Thus, we apply the typical demurrer standard of review. “In
reviewing a demurrer order, we independently evaluate the challenged
pleading, construing it liberally, giving it a reasonable interpretation, reading
it as a whole, and viewing its parts in context. [Citation.] We treat the
demurrer as admitting all material facts properly pleaded, but we do not
assume the accuracy of contentions, deductions, or conclusions of law.”
(Shaw, supra, 95 Cal.App.5th at p. 753.) Moreover, “[t]ypically, the failure to
amend a complaint constitutes an admission that the plaintiffs have stated
8
the case as strongly as they could have, and no additional facts could be
alleged to cure the defect.” (Ibid.)
We agree with the trial court’s conclusion that the demurrer was
properly granted because the voidable transfer cause of action failed to state
a cause of action. Arizona Revised Statutes section 44-1004 provides, among
other things: “A transfer made or obligation incurred by a debtor is
fraudulent as to a creditor, whether the creditor’s claim arose before or after
the transfer was made or the obligation was incurred, if the debtor made the
transfer or incurred the obligation under any of the following: [¶] 1. With
actual intent to hinder, delay or defraud any creditor of the debtor. [¶] 2.
Without receiving a reasonably equivalent value in exchange for the transfer
or obligation, and the debtor either: [¶] (a) Was engaged or was about to
engage in a business or a transaction for which the remaining assets of the
debtor were unreasonably small in relation to the business or transaction. [¶]
(b) Intended to incur, or believed or reasonably should have believed that he
would incur, debts beyond his ability to pay as they became due.” (A.R.S.
§ 44-1004, subd. A.) A “creditor” is “a person who has a claim[,]” which is “a
right to payment, whether or not the right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured.” (A.R.S. § 44-1001, subds. 2 & 3.)
The trial court correctly determined “[t]he conclusory allegations
that the Arizona Uniform Fraudulent Transfer Act applies to this case,
without alleging underlying facts, are insufficient to support a cause of
action.” The SAC merely alleges a legal conclusion that plaintiff was a
creditor with a claim because he had “rights in seller’s net proceeds in the
sale” and the Kingan defendants “stole all of the net proceeds in the sale[.]”
The trial court noted that plaintiff omitted from the SAC the allegations “that
9
reveal that his dispute arises from the administration of the Midori Hughes
Trust and the Last Will and Testament of Midori Hughes.” While plaintiff
appears to have done this in an attempt to avoid the trial court’s sustaining
of the demurrer to the FAC on jurisdictional grounds, it means the SAC
contains no alleged facts for why plaintiff purportedly was entitled to a share
of the proceeds from the sale of the property. Thus, as the trail court correctly
explained, “[t]here are no factual allegations explaining the basis of
[p]laintiff’s ‘claim’, how the Kingan [d]efendants stole the net proceeds, or
how the alleged theft le[d] to [p]laintiff becoming a ‘creditor’.”
Finally, we note the trial court also sustained the demurrer to the
voidable transfer cause of action because the cause of action should have been
filed in the probate department. On appeal, the Kingan defendants argue the
probate department had “exclusive” jurisdiction; whereas plaintiff argues the
trial court had jurisdiction. We need not resolve this issue given our
conclusion that the trial court correctly sustained the demurrer for failure to
state a cause of action and granted the motion to strike, and this issue did
not impact the trial court’s fundamental jurisdiction, but we offer our
thoughts for the benefit of the court and parties.
“Probate Code section 17000, subdivision (a), gives the probate
department of the relevant superior court ‘exclusive jurisdiction of
proceedings concerning the internal affairs of trusts.’ [Citation.]”6 (Harnedy v.
Whitty (2003) 110 Cal.App.4th 1333, 1345 (Harnedy).) But even assuming the
SAC’s causes of action implicate the probate department’s jurisdiction, the
trial court “had subject matter jurisdiction because ‘a nonprobate department
6
Probate Code section 17000, subdivision (a), states “[t]he
superior court having jurisdiction over the trust pursuant to this part has
exclusive jurisdiction of proceedings concerning the internal affairs of trusts.”
10
does not lack fundamental jurisdiction over a probate matter.’ [Citation.]”
(Michael, supra, 137 Cal.App.4th at p. 146.) Notably, “[t]he superior court is
divided into departments, including the probate department, as a matter of
convenience; but the subject matter jurisdiction of the superior court is vested
as a whole.” (Estate of Bowles (2008) 169 Cal.App.4th 684, 695.) “As Harnedy
explains, ‘the sort of jurisdiction provided by . . . [Prob. Code, § 17000] is not
the sort of fundamental jurisdiction, i.e., implicating the competency or
inherent authority of the court, the lack of which would render the judgment
void.’ [Citation.]” (Michael, supra, 137 Cal.App.4th at p. 146.) Instead, a
nonprobate department “issuing orders affecting matters within the probate
court’s exclusive jurisdiction acts only ‘“in excess of jurisdiction,”’ but does so
having subject matter jurisdiction. [Citation.]” (Ibid.) And “‘[a]n act in excess
of jurisdiction is valid until set aside, and parties may be precluded from
setting it aside by such things as waiver, estoppel or the passage of time.’
[Citation.] Consequently, a party failing to raise the issue below ‘is barred by
principles of waiver [citation] and estoppel . . . .’ [Citation.]” (Ibid.)
Thus, the trial court did not lack fundamental jurisdiction, even
assuming the probate department had jurisdiction. Moreover, as plaintiff
argued in the trial court and on appeal that the trial court had jurisdiction,
he cannot (and does not) now contend the trial court improperly reached the
merits of his claims because the claims should have been decided by the
probate department.
This being said, our holding is that the trial court did not err in
sustaining the demurrer to the voidable transfer cause of action for failure to
state a cause of action.
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II.
MOTION TO STRIKE
The trial court struck the SAC’s statutory theft cause of action
because “the scope of leave to amend did not encompass the statutory theft
claim that was added to the FAC and SAC without leave of court.” That
ruling was also correct.
“[W]hen a trial court sustains a demurrer with leave to amend,
the scope of the grant of leave is ordinarily a limited one. It gives the pleader
an opportunity to cure the defects in the particular causes of action to which
the demurrer was sustained, but that is all. [Citation.] ‘The plaintiff may not
amend the complaint to add a new cause of action without having obtained
permission to do so, unless the new cause of action is within the scope of the
order granting leave to amend.’ [Citation.]” (Community Water Coalition v.
Santa Cruz County Local Agency Formation Com. (2011) 200 Cal.App.4th
1317, 1329 (Community Water Coalition).)
Here, the trial court correctly concluded the statutory theft cause
of action was a new cause of action not within the scope of leave to amend.7
The initial complaint asserted causes of action against the Kingan defendants
for conversion, breach of fiduciary duty, and voidable transfer. After the
demurrer to the initial complaint was sustained with leave to amend, the
FAC then asserted causes of action against the Kingan defendants for
conversion, statutory civil liability for theft under Penal Code sections 484
7
Some courts apply abuse of discretion review but others appear
to apply de novo review. (Compare Community Water Coalition, supra, 200
Cal.App.4th at p. 1329 with Harris v. Wachovia Mortgage, FSB (2010) 185
Cal.App.4th 1018, 1022–1023.) Even assuming a de novo standard of review
applies to this issue, we agree with the trial court.
12
and 496, subdivision (c), and voidable transfer. Thus, the FAC asserted a new
cause of action for statutory theft and dropped the cause of action for breach
of fiduciary duty. After the demurrer to the FAC was sustained with leave to
amend, the SAC then continued to assert the new cause of action for
statutory theft (as well as the cause of action for voidable transfer).
On appeal, plaintiff asserts the trial court erred because the
statutory theft cause of action in the SAC was not new since it also was in the
FAC. That argument, however, fails to address the fact that the initial
complaint did not assert the statutory theft cause of action. The trial court
sustained the demurrer to the FAC on jurisdictional grounds, and its order
cannot be read as tacit approval of including the new statutory theft cause of
action. Indeed, when it sustained the demurrer to the FAC, the trial court
noted “[p]laintiff is reminded that leave to amend is limited to the issues
addressed in this ruling. Plaintiff must bring a motion for leave to amend if
he seeks to add new causes of action.”
In sum, the trial court did not err in granting the motion to strike
the statutory theft cause of action.
III.
SANCTIONS
“Section 128.7 applies only in limited circumstances.” (Kumar v.
Ramsey (2021) 71 Cal.App.5th 1110, 1120 (Kumar).) Under this section, “trial
courts may issue sanctions, including monetary and terminating sanctions,
against a party for filing a complaint that is legally or factually frivolous.
[Citations.] ‘A claim is factually frivolous if it is “not well grounded in fact”
and is legally frivolous if it is “not warranted by existing law or a good faith
argument for the extension, modification, or reversal of existing law.”
[Citation.] In either case, to obtain sanctions, the moving party must show
13
the party’s conduct in asserting the claim was objectively unreasonable.
[Citation.] A claim is objectively unreasonable if “any reasonable attorney
would agree that [it] is totally and completely without merit.” [Citations.]’
[Citation.]” (Ibid.)
“Ordinarily, a ruling on a motion for sanctions brought under
section 128.7 is reviewed under a deferential abuse-of-discretion standard.”
(Optimal Markets, Inc. v. Salant (2013) 221 Cal.App.4th 912, 921.) However,
“where a question of statutory construction is presented in the course of the
review of a discretionary decision, such issues are legal matters subject to de
novo review.” (Ibid.; see also Kumar, supra, 71 Cal.App.5th at p. 1125 [“abuse
of discretion also occurs if the court applies an erroneous legal standard”].)
Here, the trial court awarded monetary sanctions because it
found, “in filing the SAC and repeating claims that the court had already
ruled were not within its jurisdiction, [p]laintiff violated the certification of
[s]ection 128.7 that the SAC was ‘warranted by existing law or by a
nonfrivolous argument for the extension, modification, or reversal of existing
law or the establishment of new law.’” The trial court reasoned that asserting
in the SAC the voidable transfer cause of action “was objectively
unreasonable and no reasonable attorney would have simply repeated claims
that the court had already determined to be beyond its jurisdiction.”
However, we disagree that the voidable transfer cause of action
was frivolous because of the jurisdictional issue. Without expressing an
opinion on the merits, even assuming the trial court were correct that this
cause of action falls within the probate department’s jurisdiction, there is a
non-frivolous issue regarding whether the proper action by a trial court is to
sustain a demurrer (as the trial court did on the FAC) and dismiss an action,
or to transfer the cause of action to the probate department. As noted above,
14
the trial court did not lack fundamental jurisdiction, and the subject matter
jurisdiction of the superior court is vested as a whole. Moreover, no party has
pointed to a published opinion addressing whether a non-probate department
should dismiss an action as opposed to transfer it under these circumstances.
In sum, we conclude the trial court erred in awarding monetary sanctions
8
because the jurisdictional issue was not frivolous.
DISPOSITION
The judgment of dismissal is affirmed. The order awarding
monetary sanctions is reversed. The parties are to bear their own costs on
appeal.
BEDSWORTH, ACTING P. J.
WE CONCUR:
GOETHALS, J.
GOODING, J.
8
We understand why the trial court decided to impose sanctions
and found bad faith. If appellants believed the trial court erred in sustaining
the demurrer to the FAC on jurisdictional grounds, they could have opted not
to file the SAC and argue the issue on appeal. Instead, appellants removed
allegations in the SAC, apparently to try to avoid the issue. But we conclude,
for the reasons discussed above, there is more to this.
15