IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
KIMBERLY A. HANSEN, as her ) No. 74636-7-1 separate estate, formerly known as ) KIMBERLY ROZGAY, ) ) IV 0 CI) a 0 Appellant, ) r. .: •••4 C
) DIVISION ONE Q no em-Ti V.. ) _ -.1 "I 3> — ) *-or s•-orri MARK A. ROZGAY, individually and in ) a wrnr., = =',.•—• his capacity as Personal Representative) =r- 9 nu' -40 Estate of BARBARA ROZGAY, ) o- Trustee of the CORDES TRUST, ) C71 r< .... ROZGAY FAMILY INVESTMENTS, ) LLC, a Washington Limited Liability ) Company and the marital community of ) MARK ROZGAY AND BABBIE ROZGAY, Husband and Wife, ) UNPUBLISHED OPINION
Respondents. ) FILED: September 11,2017
MANN, J. —Appellant Kim Hansen (Hansen) and Respondent Mark Rozgay
(Rozgay) are two of four children adopted by Clarence and Barbara Rozgay. In
December 2010, Rozgay assisted his parents in finding an estate planning lawyer who
prepared a series of estate documents including a revocable trust and irrevocable trust.
One effect of the 2010 estate plan was to disinherit Hansen from her parents' estate. No. 74636-7-1/2
After her mothers death, Hansen brought this action seeking to invalidate
several of the estate documents on the grounds that her parents' lack of capacity and
Rozgay's undue influence. The trial court dismissed Hansen's action on summary
judgment.
We affirm in part and reverse in part. We also vacate the trial court's award of
attorney fees.
FACTS
A. Cordes Trust
Barbara Rozgay's parents, Herman and Harriet Cordes, established the "Cordes
Living Trust of 1979" (Cordes trust). The Cordes trust was established to meet
Barbarassi expenses for life, then, upon her death, the assets were to be distributed to
Barbara and Clarence's four children as residual beneficiaries. The Cordeses originally
conveyed their Hood Canal waterfront home to the Cordes trust. In 1991, however, the
Hood Canal home was conveyed to Barbara as her separate property. In 2004,
Barbara's son Rozgay became the trustee of the Cordes trust. Rozgay and Hansen,
along with their two siblings Michael and Lisa, remain the residual beneficiaries of the
Cordes trust.
B. 2010 Estate Planning
In 2010, Clarence and Barbara updated their estate planning. In October 2010,
Rozgay took Barbara to meet with the Cordes trust accountants to discuss tax planning,
the Hood Canal home, and a community property collection of art. The accountants
I In order to avoid confusion, we refer to Barbara and Clarence Rozgay by their first names. No disrespect is Intended. -2- No. 74636-7-1/3
recommended Rozgay obtain an appraisal for the Hood Canal house, which he
subsequently did. Rozgay then contacted an estate planning attorney, Kanoa Ostrem,
based on a referral from a business associate. On December 21, 2010, Rozgay
accompanied Clarence and Barbara to meet with Ostrem and a financial planner.
Following the December meeting, Ostrem sent an e-mail to Rozgay with an
outline and budget for an estate plan that included a transfer of the Hood Canal house.
One of the items left unresolved in the outline was that "Mr. and Mrs. Rozgay must
decide about Kim's share." Ostrem explained that he could complete "the Hood Canal
portion this year and the remaining planning shortly after Mr. and Mrs. Rozgay make a
decision about Kim's share." The next morning, Rozgay responded by e-mail telling
Ostrem to "please move forward on all of this."
Ostrem ultimately prepared 24 estate planning documents for Barbara and
Clarence. The documents included the last will and testaments for Barbara and
Clarence, a community property agreement, general durable powers of attorney, and
medical powers of attorney. The documents also established the Rozgay Family Living
Trust (Living Trust), the Rozgay Irrevocable Trust (Irrevocable Trust), and the Rozgay
Family Investments, LLC (LLC).
Ostrem e-mailed the documents to Rozgay on December 23, 2010. According to
Ostrem's e-mail, "your parents need to make a decision about Kim's share. That is the
only blank in the documents." Ostrem testified that he met alone with Clarence and
Barbara on December 23 or 24, 2010, but did not have records of the meeting. Detailed
daily journals by Barbara and Clarence's full-time caregivers do not reference any
meetings between December 22 and December 26, 2010.
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Rozgay, Clarence, and Barbara next met with Ostrem on December 27, 2010, at
Clarence and Barbara's home. Clarence and Barbara executed the 24 documents
creating a comprehensive estate plan. By way of summary, the estate planning
documents resulted in the following actions:
First, Clarence and Barbara entered a community property agreement that
irrevocably transferred Barbara's separate property Hood Canal house and her
investment portfolios to the marital community.
Second, Clarence and Barbara created the LLC. They were each originally 50-
50 members in the LLC. Rozgay was named as the LLC manager. Clarence and
Barbara then deeded the Hood Canal house to the newly created LLC in exchange for
membership units.
Third, Clarence and Barbara created the Irrevocable Trust. Clarence and
Barbara were named as trustors and Rozgay was named as the Trustee. Under the
terms of the Irrevocable Trust, during Clarence and Barbara's lifetime, the Trustee
(Rozgay) was to distribute net income as necessary to support Rozgay, his brother
Michael, and their families. Upon Clarence and Barbara's deaths, the Irrevocable Trust
was to be divided between Rozgay, his brother Michael, and their families. The
Irrevocable Trust made no provision for Hansen or her sister Lisa.
With the Irrevocable Trust established, Clarence and Barbara both signed three
assignments conveying the majority of their individual membership units in the LLC to
the Rozgay Irrevocable Trust. The rest of their individual units were conveyed to the
Irrevocable Trust through a signed purchase and sale agreement. The end result was
that the Rozgay Irrevocable Trust became the sole member of the LLC. Clarence and
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Barbara received a promissory note in payment for their units from the Irrevocable
trust.2
Fourth, Clarence and Barbara created the Living Trust and transferred their
remaining community property into it. Clarence and Barbara then deeded their Medina
home to the Living Trust. The Living Trust was established to pay Clarence and
Barbara's expenses while there were alive, and then be distributed to Rozgay, his
brother Michael, and their families, after Clarence and Barbara's death. The Living
Trust expressly made no provision for Hansen or Lisa.
Fifth, Clarence and Barbara signed their wills. The wills made provisions to
transfer tangible personal property to the surviving spouse, or if the spouse was
deceased, to Rozgay, his brother Michael, and their families. The wills expressly made
no provision for Hansen or Lisa. Any residual property was to be distributed to the
Living Trust.
Finally, Rozgay was made the attorney-in-fact for both Clarence and Barbara,
under a durable power of attorney and a medical power of attorney.
C. Post Estate Plan
Beginning in 2009 or early 2010, Clarence and Barbara had full-time live-in
caretakers. In February 2011, Clarence and Barbara were institutionalized in the
Memory Loss Care Unit of Overlake Terrace. At the time he checked them in, Michael
informed the Memory Loss Care Unit that Clarence and Barbara both were incontinent,
2 Rozgay testified that there was an oral agreement that the promissory note was never intended to be paid, but would be satisfied with gifts over the course of time." -5- No. 74636-7-1/6
had dementia, and had CPAP machines. Barbara had a feeding tube. Barbara died in
September 2011. Rozgay became her personal representative.
After Barbara's death, Hansen received notice of Barbara's probate and learned
she had been disinherited. Hansen sent Rozgay an e-mail questioning whether Rozgay
had been involved in the decision to disinherit her. Rozgay responded that he had not
told Barbara and Clarence who to include in their will, however, he had told them to
include himself and Michael in the inheritance of the Hood Canal house, because "no
one had heard from" Hansen. Hansen became suspicious of Rozgay's involvement in
the estate plan and requested an accounting from Rozgay, as the trustee of the Cordes
trust. Rozgay provided Hansen with a formal accounting of the Cordes trust.
Hansen then filed this action before the King County Superior Court. The
complaint sought, in part, to (1) terminate the power of attorney appointing Rozgay as
attorney-in-fact for Clarence,3 (2) to invalidate the Irrevocable Trust, Livable Trust, and
LLC, and restore the probate estate of Barbara for Clarence, and (3) an order quieting
title to the Hood Canal house distributing 50 percent to Clarence and 50 percent for the
benefit of all four of the Rozgay children as intestate heirs, and (5) damages.
On January 4, 2015, the trial court granted Rozgay's motion for summary
judgment dismissing all of Hansen's claims. The trial court subsequently granted
Rozgay's motion for attorney fees pursuant to the Trust Estate Dispute Resolution Act,
Ch. 11.96A (TEDRA), RCW 11.94.120, and RCW 11.24.050. The trial court awarded
3 Clarence Rozgay died while this matter was pending rendering moot Hansen's claim to remove Rozgay's power of attorney. -6- No. 74636-7-1/7
Rozgay $174,603.50 for attorney fees and $16,329.66 for costs against Hansen's
marital community. Hansen appeals.
ANALYSIS
Exclusion of Testimony
Before reaching the merits of the substantive arguments, we must resolve an
evidentiary issue. In response to Rozgay's motion for summary judgment, Hansen
offered a declaration from her expert Jullie M. Gray, MSW, a licensed independent
clinical social worker. Based on her knowledge, skill, experience, training, and
education, combined with her review of medical records, deposition transcripts, and
journal entries from Clarence and Barbara's full-time caregivers, Gray opined that by
December 2010, Clarence and Barbara had very serious cognitive problems and "could
not possibly have read or understood the contents of the documents presented for their
signature on December 27, 2010? Gray further opined that Clarence and Barbara were
"particularly vulnerable to undue influence over the conduct of their personal affairs,
including financial affairs."
In response to Rozgay's motion, the trial court struck Gray's declaration, stating
"the testimony of expert witness Jullie Gray is stricken and not considered because she
is not qualified to render medical opinions and Plaintiff failed to timely disclose her
opinion? Hansen argues that the trial court erred in striking the declaration testimony of
her expert. We agree.
A. Discovery Sanction
We review a trial court's decision to exclude evidence for an abuse of discretion.
Jones v. City of Seattle, 179 Wn.2d 322, 337, 314 P.3d 380 (2013). A court abuses its
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discretion in admitting or excluding expert testimony when its decision is manifestly
unreasonable or based on untenable grounds or reasons. The exclusion of testimony
for discovery violations is a severe sanction. Before imposing such a sanction, it must
be apparent from the record that the trial court explicitly considered the three Bumet
factors: (1) whether a lesser sanction would probably suffice, (2) whether the violation
was willful or deliberate, and (3) whether the violation substantially prejudiced the
opposing party. Burnet v. Spokane Ambulance, 131 Wn.2d 484, 494, 933 P.2d 1036
(1997); Jones 179 Wn.2d at 338. The record before us is devoid of any analysis of the
Burnet factors.
Hansen's August 2015 primary witness list disclosed that Gray would testify as
an expert witness "regarding the capacity of Clarence and Barbara Rozgay." The
disclosure included Gray's curriculum vitae (CV). During discovery, Rozgay asked
Hansen to identify all evidence that would support her contention that Clarence and
Barbara lacked capacity. Hansen's October 2015 response again identified the expert
testimony of Gray. While Hansen's response did not include the specifics of Gray's
opinions, Rozgay did not request additional information or seek an order compelling
discovery.
Even though Hansen's initial disclosure was incomplete, there is no evidence
that a lesser sanction, such as granting Rozgay an extension and leave to depose Gray,
was considered. The trial court abused its discretion in excluding Gray's testimony due
to Hansen's delay in disclosing Gray's opinion.
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B. ER 702
The trial court also found that Gray was not qualified "to render medical
opinions? The trial court did not explain the basis for this decision. ER 702 controls the
testimony of experts?' On summary judgment the court engages in a two-part inquiry:
"(1) does the witness qualify as an expert; and (2) would the witness's testimony be
helpful to the trier of fact." State v. Guilliot, 106 Wn. App. 355, 363, 22 P.3d 1266
(2001); Acord v. Pettit, 174 Wn. App. 95, 302 P.3d 1265 (2013). Once a witness is
qualified as an expert, argument goes to the weight—not the admissibility of the
testimony. Keegan v. Grant Cv. Pub. Util. Dist. No. 2 34 Wn. App. 274, 283, 661 P.2d
146 (1983).
Ordinarily, "[q]ualifications of expert witnesses are to be determined by the trial
court within its sound discretion, and rulings on such matters will not be disturbed
unless there is a manifest abuse of discretion." Oliver v. Pacific Northwest Bell Tel. Co.,
106 Wn.2d 675, 683, 724 P.2d 1003 (1986)). However, "[Ole de novo standard of
review is used by an appellate court when reviewing all trial court rulings made in
conjunction with a summary judgment motion." Folsom v. Burger King, 135 Wn.2d 658,
663, 958 P.2d 301 (1998); Sevbold v. Neu, 105 Wn. App. 666, 678, 19 P.3d 1068
(2001).
Rozgay argues that Gray was not qualified to opine on Clarence and Barbara's
capacity and vulnerability to undue influence because she is not a licensed physician.
We disagree. A witness may be qualified as an expert by her knowledge, skill,
4 "If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact at Issue, a witness qualified as an expert by knowledge, skill, experience, training, or education, may testify thereto In the form of an opinion or otherwise? ER 702.
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experience, training, or education. ER 702. "Practical experience is sufficient to qualify
a witness as an expert: State v. Ortiz 119 Wn.2d 294, 310, 831 P.2d 1060 (1992),
overruled on other grounds, State v. Condon, 182 Wn.2d 307, 343 P.3d 357 (2015).
Washington courts have held that certified social workers, psychologists, and mental
health social workers can be competent to diagnose mental disorders and provide
expert opinion about mental disorders. See pA‘, In re Det. of A.S., 138 Wn.2d 898,
918, 982 P.2d 1156 (1999) (social worker may testify to the existence of a mental
disorder); Saldivar v. Momah, 145 Wn. App. 365, 397-98, 186 P.3d 1117 (2008) (social
worker may testify regarding whether individual was suffering from PTSD).
Gray's extensive CV was included with her December 2015 declaration. It shows
that she obtained a Masters of Social Work from the University of Washington in 1991.
She is licensed or certified as: (1) a Licensed Independent Clinical Social Worker, (2) a
Certified Care Manager, certified by the National Academy of Certified Care Manager,
(3) was certified by the Washington Supreme Court as a Certified Professional
Guardian from 2008 to 2013, and (4) holds a Geriatric Mental Health Certificate issued
by the University of Washington. Gray serves on the King County Elder Abuse Council,
and at the time of her declaration was the president of the National Academy of
Certified Care Managers. She has instructed health care and social service
professionals, as well as the general public, on issues related to aging, ethics, and
dementia. From 1995 to 2004, Gray was a lead social worker for the Evergreen
Emergency Department where her work included mental health evaluations and
assessment of elder abuse. From 2004 to 2007, Gray was a case manager with
Evergreen Hospice where her duties included conducting psychosocial assessments.
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Gray is currently a principal at a private care-management company providing
consulting to older adults, adults with disabilities, and families regarding problems
related to aging and dementia.
We find that Gray was qualified to opine on issues related to Clarence and
Barbara's capacity and vulnerability to undue influence. While Gray's opinions were
based on her review of records and she did not conduct her own examination, this goes
to the weight of the testimony, not its admissibility. Keegan, 34 Wn. App. at 283.
Because Gray is qualified to give her opinions and her opinions may be helpful to the
trier of fact, the trial court abused its discretion in striking and failing to consider Gray's
declaration. Guilliot, 106 Wn. App. at 363.
Statute of Limitations
Hansen argues the trial court erred in concluding that her claims challenging the
estate planning documents, including the formation of the LLC, the Irrevocable Trust
and the Living Trust were "will contests" and thus time-barred by ROW 11.24.010. A
trial court's interpretation of a probate statute is a question of law that we review de
novo. In re Estate of Jones, 152 Wn.2d 1, 8-9, 93 P.3d 147 (2004).
An action is considered a will contest where the fundamental thrust of the claim is
to determine issues "affecting the validity of the will." Cassell v. Portelance, 172 Wn.
App. 156, 162, 294 P.3d 1(2012); ROW 11.24.010. A will contest must be filed within
four months following probate. ROW 11.24.010. Washington courts strictly enforce the
requirements for commencing a will contest. In re Estate of Jeosen, 184 Wn.2d 376,
381, 358 P.3d 403 (2015) (citing In re Estate of Toth, 138 Wn.2d 650, 653, 981 P.2d
439 (1999)). "The four-month period is absolute.... If the will contest is not filed prior
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to the expiration of the four-month period, the contest will be absolutely barred." Toth,
138 Wn.2d at 656.
There is no dispute that Hansen's lawsuit was filed long after the four-month limit
for contesting Barbara's will. Barbara passed away in September 2011; Hansen filed
this action in December 2014. It is also undisputed that Hansen's complaint did not
challenge Barbara's will. Instead Hansen challenged the validity of the Living Trust, the
Irrevocable Trust, the LLC, and the community property agreement. Rozgay argues
that because the estate planning documents were executed at the same time as the
will, Hansen's action to invalidate the estate planning documents must be deemed a will
contest and subjected to the four-month statute of limitations. On these facts, we
disagree.
Rozgay relies on Cassell, and In re Estate of Palmer v. World Gospel Mission,
146 Wn. App. 132, 137-38, 189 P.3d 230 (2008). Both cases are factually
distinguishable. Cassell involved a wrongful death action against a doctor brought by
the surviving wife, Rhoda Cassell, as personal representative for her husband David
Finch. Three years after Finch's death, and four days before the wrongful death trial
was scheduled to begin, the doctor moved to dismiss the suit on the basis that the will
appointing Cassell as personal representative was a fraud. Cassell, 172 Wn. App. at
159. The trial court granted a continuance allowing the doctor to address the issue with
the probate court. The doctor was subsequently granted leave to intervene before the
probate court. Cassell, 172 Wn. App. at 156. After the probate court nullified the
original appointment of Cassell as the personal representative, the trial court
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determined that any actions taken by Cassell, including filing the wrongful death action,
were null and void. Cassell, 172 Wn. App. at 161-62.
This court reversed the probate court's order granting the doctor leave to
intervene before the probate court. While the doctor denied that his motion to intervene
was an attempt to initiate a will contest, we disagreed:
These allegations—that Finch lacked the capacity to make a will on the day he signed in, that he had not signed the will, and that the will was not properly witnessed—are precisely what a court considers in a will contest under RCW 11.24.010.
Cassell, 172 Wn. App. at 163. Thus, despite the doctor's characterization, we
concluded that a "court may treat a motion as a will contest, even where the
petitioner styles it otherwise." Cassell, 172 Wn. App. at 162 (citing Palmer, 146
Wn. App. at 137-38). And, because the doctor lacked standing to bring a will
contest under RCW 11.24.010, we reversed.
In Palmer, husband and wife decedents established a revocable living trust
agreement that designated the World Gospel Mission as the 75 percent beneficiary with
the remainder to be designated to their children and grandchildren. On that same date,
the decedents executed pourover wills that bequeathed their entire estates to the living
trust. Palmer, 146 Wn. App. at 134. The husband died in 2001 and the wife died in
2003. Palmer, 146 Wn. App. at 135. Over three years later, one of the decedents'
daughters, Dawn Palmer Golden, moved to disqualify the World Gospel Mission as a
trust beneficiary. Palmer, 146 Wn. App. at 135. A superior court commissioner held
that Golden's claims were, in essence, a will challenge and time-barred under RCW
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11.24.010. The trial court declined to revise the commissioner's decision. Palmer, 146
Wn. App. at 135-36.
On appeal, Golden argued that her claims challenged the validity of the
testamentary trust as opposed to a will contest. Palmer 146 Wn. App. at 136. The
Court of Appeals disagreed, noting that Golden's challenge to the distribution of the
decedents' estate could not be separated from a challenge to the validity of the portion
of the wills conveying the estate to the living trust. The court found that: "Under these
facts Golden's challenge is, in all important respects, a will contest." Palmer, 146 Wn.
App. at 137.
Here, unlike Cassell, where the doctor was challenging the signatures on the
will—a blatant will contest—Hansen is not challenging any aspect of Barbara's will. She
is challenging the validity of the estate documents transferring title and assigning
beneficiary interests in Clarence and Barbara's property through the community
property agreement, Irrevocable Trust, LLC, and Living Trust.
And unlike Palmer, where the irrevocable trust was dependent upon, and funded
only by, the pourover will, the estate documents here were stand-alone and not
dependent upon the will. The community property agreement had the immediate effect
of irrevocably transferring title to Barbara's separate property interest in the Hood Canal
house and her investment portfolio to the marital community. Clarence and Barbara
then deeded the Hood Canal house to the LLC and transferred their interests in the LLC
to the Irrevocable Trust. None of these irrevocable transfers were dependent upon the
will. Similarly, while the wills did provide for any residual property to be distributed to
the Living Trust, the Living Trust was not dependent on this provision in the wills. The
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Living Trust was established in December 2010 and immediately funded by Clarence
and Barbara's remaining community property, and then a month later by the Clarence
and Barbara transferring title to the Medina home into the Living Trust.
The Living Trust, the Irrevocable Trust, and the LLC, were all created separate
and apart from Barbara's will and a claim challenging their creation does not require the
court to determine issues "affecting the validity or Barbara's will. The trial court erred in
finding that Hansen's claims challenging the community property agreement, trusts, and
LLC were "will contests" barred by RCW 11.24.010.
Undue Influence and Lack of Capacity
Hansen argues next that the trial court erred in dismissing her claims that
Clarence and Barbara lacked capacity to enter the challenged documents and were
subject to undue influence. Because of the high burden of proof required to
demonstrate lack of capacity we agree that, based on the evidence presented,
dismissal was appropriate. However, we agree with Hansen that the trial court erred in
dismissing her claim for undue influence on summary judgment. We address each
claim in turn.
A Standard of Review
We review decisions on summary judgment de novo and engage in the same
inquiry as the trial court. Folsom 135 Wn.2d at 663. Summary judgment is properly
granted when the pleadings, affidavits, depositions, and admissions on file demonstrate
there is no genuine issue of material fact and the moving party is entitled to judgment as
a matter of law. CR 56(c). The burden is on the moving party to demonstrate that there
are no genuine issues of material fact. Folsom, 135 Wn.2d at 663. We consider all the
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facts and make all reasonable, factual inferences in the light most favorable to the
nonmoving party. Youno v. Key Pharms., Inc. 112 Wn.2d 216, 226,770 P.2d 182
(1989). "The motion should be granted only if, from all of the evidence, a reasonable
person could reach only one conclusion." Folsom, 135 Wn.2d at 663.
The general principles of summary judgment are supplemented by additional
principles when a party claims undue influence and lack of capacity. The determination
of undue influence and capacity both require proof at trial by clear, cogent, and
convincing evidence, and we incorporate that standard of proof in conducting
substantial evidence review. In re Trust and Estate of Me!ter, 167 Wn. App. 285, 300,
273 P.3d 991 (2012); Kitsap Bank v. Denley, 177 Wn. App. 559, 569-70, 312 P.3d 711
(2013). The party bearing the burden of proof at trial must present sufficient evidence to
make it "highly probable" that the claim will prevail at trial. Kitsap Bank, 177 Wn. App. at
569. Thus, "[a] trial court may grant a summary judgment motion to dismiss if no
rational trier of fact, viewing the evidence in the light most favorable to the nonmoving
party, could find clear, cogent, and convincing evidence on each element." Kitsap
Bank 177 Wn. App. at 569-70 (citing Metter, 167 Wn. App. at 301).5
5 Our review here necessarily Includes consideration of the Declaration of Jullie Gray. As our Supreme Court has explained: An appellate court would not be properly accomplishing its charge if the appellate court did not examine all the evidence presented to the trial court, including evidence that had been redacted. The de novo standard of review is used by an appellate court when reviewing all trial court rulings made in conjunction with a summary judgment motion. This standard of review is consistent with the requirement that evidence and inferences are viewed in favor of the nonmoving party, and the standard of review is consistent with the requirement that the appellate court conduct the same inquiry as the trial court. folsom, 135 Wn.2d at 663 (citing Lamon v McDonnell Doualas Corn., 91 Wn.2d 345, 349, 588 P.2d 1346 (1979) and Mountain Park Homeowners Ass'n v Tvdinas 125 Wn.2d 337, 341, 883 P.2d 1383 (1994))
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B. Lack of Capacity
Hansen challenges Clarence and Barbara's capacity to enter three estate
documents: the Living Trust, the Irrevocable Trust, and the LLC. Because the standard
for determining capacity differs between testamentary and transactional documents, we
review each separately.
1. The Living Trust
Because the Living Trust is a revocable trust, it requires the same capacity as
that for creating a will. RCW 11.103.020. See also UNIF. TRUST CODE § 402, 7C U.L.A.
481 (2006). "[A] person is possessed of testamentary capacity if at the time he
assumes to execute a will he has sufficient mind and memory to understand the
transaction in which he is then engaged, to comprehend generally the nature and extent
of the property which constitutes his estate and of which he is contemplating disposition,
and to recollect the objects of his bounty? In re Bottqer's Estate, 14 Wn.2d 676, 685,
129 P.2d 518 (1942).
"Where a will is rational on its face and is shown to have been executed in legal
form, the law presumes that the testator had testamentary capacity and that the will
speaks his wishes." Dean v. Jordan, 194 Wn. 661, 668, 79 P.2d 331 (1938). "Evidence
challenging testamentary capacity usually consists of medical testimony, testimony of
attesting witnesses, and testimony of other lay witnesses." In re Estate of Eubank, 50
Wn. App. 611, 618, 749 P.2d 691 (1988). With respect to medical testimony, special
consideration should be given to the opinion of the attending physician. Eubank, 50
Wn. App. at 618.
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Rozgay offered the declaration of Clarence and Barbara's treating physician, Dr.
Henry Williams. Dr. Williams treated both Clarence and Barbara for several years. Dr.
Williams reviewed Clarence and Barbara's medical records for 2009, 2010, and 2011,
and opined:
The medical records in 2009 show that Clarence had a mini mental status exam with a score of 28 out of 30, which means that he was clearly capable of providing informed consent, and his judgment was good. Often when he got sick he suffered from temporary delirium, which is a temporary worsening of dementia symptoms, but in between these episodes of delirium, and at least until the later part of 2011, he would return to a reasonably good cognitive function, when he could provide Informed consent. Barbara Rozgay had no cognitive functioning issues.
I understand that Clarence and Barbara Rozgay executed estate planning documents in December 2010. Based on my recollection and review of his medical records, I believe that Clarence was clearly capable of understanding the significance of signing such documents and fully knew who his family members were and the scope of his assets and their value.
Rozgay also offered the testimony of Clarence and Barbara's attorney Ostrem.
Ostrem testified that after the initial meeting with Clarence, Barbara, and Rozgay, he
talked with Clarence and Barbara by telephone to discuss potential changes to the
estate plan, including whether to remove Hansen as a beneficiary. Ostrem then met
with Clarence and Barbara to discuss the changes. During this second, December 4,
2010, meeting Clarence and Barbara instructed Ostrem to remove provisions for
Hansen. Ostrem further testified that when he met with Clarence and Barbara to sign
the documents on December 27, 2010, they were aware of the changes to the estate
plan and agreed to them, and that Clarence was competent, participated in the
conversation, and understood what they were discussing.
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In contrast, Hansen provided deposition testimony from in-home caregiver Lisa
Baker, who described several instances of Clarence acting in a state of delirium, his
conversations not making sense, wandering out at night, and forgetting how to get
around. Another caregiver, Debbie Loveless, testified that Clarence seemed unaware
and confused. Hansen's expert, Jullie Gray, did not meet with either Clarence or
Barbara, but instead reviewed and summarized the testimony of Baker and Loveless.
Gray opined, that based on her knowledge, training, and experience, Clarence and
Barbara lacked cognitive capacity to understand the estate planning documents.
While Hansen's evidence certainly raises a question on Clarence's capacity,
Hansen failed to meet the high burden of demonstrating that it would be "highly
probable" that she would prevail at trial. Kitsap Bank, 177 Wn. App. at 569. While it is
undisputed that Clarence did have periods of time when he was confused or even
delirious, the evidence is insufficient to prove a lack of testamentary capacity at the time
of signing the will. Neither of the caregivers testified that the parents were in a condition
of "general insanity" where they were unable to comprehend even "generally" the nature
and extent of the property. 'Failure of memory is not alone enough to create
testamentary incapacity, unless it extends so far as to be inconsistent with the 'sound
and disposing mind and memory requisite for all wills.'" In re Estate of Kessler, 95 Wn.
App. 358, 371, 977 P.2d 591 (1999) (quoting In re Denison's Estate, 23 Wn.2d 699,
714, 162 P.2d 245 (1945)).6
6 it must always be remembered that there is a decided difference between eccentricity, mental peculiarities, misapprehensions, temporary or partial hallucinations on the one hand, and testamentary capacity on the other. Many persons have been at times violently Insane, while at other times they were mentally sufficiently normal to enjoy testamentary capacity." In re Denison's Estate, 23 Wn.2d 699, 707, 162 P.2d 245, 249 (1945). -19- No. 74636-7-1/20
In light of the testimony of Clarence and Barbara's treating physician, even
viewing the evidence in the light most favorably to Hansen, we cannot find that a
rational trier of fact could find clear, cogent, and convincing evidence on each element
necessary to provide a lack of testamentary capacity. Kitsao Bank, 177 Wn. App. at
569-70 (citing Melter, 167 Wn. App. at 301).
b. The Irrevocable Trust and LLC
Unlike a will or revocable trust, both the Irrevocable Trust and LLC require
general contract transactional capacity. As the comment to section 402 of the Uniform
Trust Code explains,
[T]his section includes a capacity standard for creation of a revocable trust because of the uncertainty in the case law and the importance of the issue in modern estate planning. No such uncertainty exists with respect to the capacity standard for other types of trusts. To create a testamentary trust, the settlor must have the capacity to make a will. To create an irrevocable trust, the settlor must have the capacity that would be needed to transfer the property free of trust.
UNIF. TRUST CODE § 601 cmt., 7C U.L.A. 545 (2006).7
The test for determining transactional capacity is similar to determining
testamentary capacity. The test of mental capacity to contract is whether "the
contractor possessed sufficient mind or reason to enable him to comprehend the nature,
terms, and effect of the contract in Issue." Page v. Prudential Life Ins. Co. of Am., 12
Wn.2d 101, 108-09, 120 P.2d 527 (1942). Although,
7 See generally RESTATEMENT (THIRD) OF PROPERTY: WILLS AND OTHER DONATIVE TRANSFERS § 8.1 (2003); RESTATEMENT (THIRD) OF TRUSTS § 11 (2003); RESTATEMENT (SECOND) OF TRUSTS §§ 18-22 (1959). See also Karen E. Boxx & Katie S. Groblewski, Washington Trust Laws' Extreme Makeover: Blending with the Uniform Trust Code and Taking Reform Further with Innovations In Notice. Situs. and Representation, 88 WASH. L. REv. 813, 886 (2013).
-20- No. 74636-7-1/21
It is not necessary to show that a person was incompetent to transact any kind of business, but to invalidate his contract it is sufficient to show that he was mentally incompetent to deal with the particular contract In issue. On the other hand, to avoid a contract it is Insufficient to show merely that the party was of unsound mind or insane when it was made, but it must also be shown that this unsoundness or insanity was of such a character that he had no reasonable perception or understanding of the nature and terms of the contract. The extent or degree of intellect generally is not in issue, but merely the mental capacity to know the nature and terms of the contract.
Page, 12 Wn.2d at 108-09.
As with testamentary capacity, transactional capacity is a question of fact to be
determined at the time the transaction occurred. Page, 12 Wn.2d at 109.
Although the legal standard is higher for transactional capacity, Hansen again
failed to establish that it would be highly probable that she would prove each element by
demonstrating clear, cogent, and convincing evidence. Hansen has not presented
evidence that at the time Clarence and Barbara signed the Irrevocable Trust and LLC,
that they were mentally incompetent to deal with the particular contract at issue. The
only marginally relevant evidence was the evidence that the parents did not remember
the documents at a later time, and their accountant, Michael McAuliffe, mentioned that
Clarence was losing cognitive abilities. McAuliffe did not, however, go so far as to claim
that Clarence was unable to understand what was happening. This is still not "clear,
cogent, and convincing" evidence that they did not understand the contracts at the time.
Hansen failed to show the parents lacked contractual capacity. The trial court did not
err in dismissing both Hansen's claims of lack of capacity.
-21- No. 74636-7-1/22
3. Undue Influence
"'Undue influence involves unfair persuasion that seriously impairs the free and
competent exercise of judgment.'" Kitsap Bank, 177 Wn. App. at 570 (quoting In re
Estate of Jones, 170 Wn. App. 594, 606, 287 P.3d 610 (2012)). In reviewing wills and
gifts, the most important are: (1) a confidential or fiduciary relationship between the
testator and beneficiary, (2) a beneficiary's active participation in the transaction, and
(3) whether the beneficiary received an unusually large part of the estate. Kitsap Bank,
177 Wn. App. at 570-71; Melter, 167 Wn. App. at 298. The court should also consider
factors "such as age and mental or physical health of the testator, the nature of the
relationship, the opportunity for exerting undue influence, and the naturalness of the
will." Kitsap Bank, 177 Wn. App. at 571; Melter, 167 Wn. App. at 298.
As a general rule, the party seeking to set aside an inter vivos gift, such as the
Irrevocable Trust, has the burden of demonstration that the gift was invalid. Endicott V.
Saul 142 Wn. App. 899, 922, 176 P.3d 560 (2008). "But if the recipient has a
confidential or fiduciary relationship with the donor, the burden shifts to the donee to
prove 'a gift was intended and not the product of undue influence." Endicott, 142 Wn.
App. at 922 (quoting Lewis v. Estate of Lewis, 45 Wn. App. 387, 389, 725 P.2d 644
(1986)); White v. White, 33 Wn. App. 364, 368, 655 P.2d 1173 (1982). "'[E]vidence to
sustain the gift between such persons 'must show that the gift was made freely,
voluntarily, and with a full understanding of the facts... If the judicial mind is left in
doubt or uncertainly as to exactly what the status of the transaction was, the donee
must be deemed to have failed in the discharge of his burden and the claim of gift must
be rejected.'" Endicott, 142 Wn. App. at 922 (quoting McCutcheon v. Brownfield, 2 Wn.
-22- No. 74636-7-1/23
App. 348, 356, 467 P.2d 868 (1970)). "The donee's burden of proof is by clear, cogent,
and convincing evidence." Endicott, 142 Wn. App. at 922.
It is undisputed, and Rozgay readily admitted during oral argument, that there
was a confidential or fiduciary relationship between Rozgay and Clarence and Barbara
at the time they signed the estate planning documents. Thus, Rozgay has the burden
of demonstrating, with clear, cogent and convincing evidence, that he did not assert
undue influence over Clarence and Barbara.
Here, it is undisputed that Rozgay provided the accountant and attorneys that
assisted his parents and was present at least at the initial meeting with the lawyer and
accountant, with some evidence that he was present at later meetings. It is undisputed
that attorney Ostrem sent the draft estate documents to Clarence and Barbara through
Rozgay. There is also evidence that Rozgay provided advice to his mother about the
Hood Canal house, including advice that they could leave Hansen out of ownership
because no one had heard from her in a while.
It is also undisputed that Rozgay was present at the signing to answer any
questions. Finally, Rozgay's share in the Irrevocable Trust and Revocable Trust was
enhanced by Clarence and Barbara leaving Hansen out. With the removal of Hansen,
Rozgay was able to receive a larger portion of the estate, and he became the trustee
and sole manager of all of the new instruments. Finally, it is undisputed that Clarence
and Barbara were elderly, and had demonstrated a loss of memory and cognitive ability.
They clearly relied on Rozgay's expertise and connections.
While Rozgay presented contrary evidence, it was insufficient to demonstrate
that it was "highly probable" that he would prevail at trial. We cannot find that no
-23- No. 74636-7-1/24
rational trier of fact, viewing the evidence in the light most favorable to Hansen, could
find clear, cogent, and convincing evidence to meet Rozgay's burden of demonstrating
that there was no undue influence. Kitsap Bank, 177 Wn. App. at 569-70 (citing Melter,
167 Wn. App. at 301). The trial court erred in granting summary judgment on Hansen's
claims for undue influence.
Breach of Fiduciary Duty
Hansen argues next that after the Hood Canal house was placed in the Rozgay
Irrevocable Trust, Rozgay, as trustee of the Cordes trust, used Cordes trust money to
improve the Hood Canal house. Hansen maintains that this diversion was a gift taken
from the Cordes trust that benefited Rozgay and Michael, the beneficiaries of the Hood
Canal house, to the detriment of the other beneficiaries of the Cordes trust. This,
Hansen contends, was a breach of Rozgay's fiduciary duty to the Cordes trust.
Hansen argues that the trial court erred in granting summary judgment and
dismissing her claim that Rozgay breached his duties as trustee of the Cordes trust.
We agree.8
The evidence offered by Hansen demonstrates that funds were drawn directly
from the Cordes trust in order to pay for Hood Canal house expenses. Rick Miller, the
accountant for the Cordes trust, expressed concern that those expenses weren't "really
shared equally by Lisa and Kim." In response, Rozgay told Miller that the repairs to the
Hood Canal house were something Barbara wanted done before transferring the house.
• As an initial matter, the trial court's finding that Hansen lacked standing to bring a claim that Rozgay breached his fiduciary duties as trustee for the Cordes trust was in error. For the Cordes trust, Rozgay Is a 'beneficiary trustee.' In Washington, a beneficiary may serve as trustee, with some limitations that are not at Issue here. See RCW 11.98.200. As a remainder beneficiary of the Cordes trust, Hansen has standing to bring a claim that Rozgay breached his duty as trustee. See RCW 11.100.045. -24- No. 74636-7-1/25
In response, Miller agreed to recategorize the. expenses and treat the withdrawals "as
distributions to your Mom prior to her death, and get these out of deductible expenses."
In support of his motion for summary judgment, Rozgay explained the use of the
Cordes trust funds for the Hood Canal house:
While she was alive, Barbara Rozgay exclusively directed the expenditures of money on the Hood Canal house, as she was then a member of the LLC that owns the house. She paid for the roof repair, gutters, water line replacement, and various other maintenance items. (Rozgay Decl. in Opp'n to Mot. for Accounting at' 8, Dkt. 45.) Barbara Rozgay used the income that she received from the Cordes Family Trust and the Rozgay Family Trusts to pay for many of the expenses, and she had complete discretion to use this income in any manner she chose. (Id.) Mr. Rozgay signed some of Barbara's checks, but this was commonplace because she had a difficult time writing due to arthritis, and he was an authorized signer on her account for that reason. (Id.) All use of income was known by the Cordes Trust CPA, Rick Miller, and fully documented in the accountings provided to Ms. Hansen in April of 2014.
In response, Hansen argues that Rozgay could not testify to his conversations
with Barbara supporting his transfers of Cordes Trust funds under the udeadman's
statute," RCW 5.60.030. In general, "if the person wanting to testify has an interest
adverse to the decedent's estate and the opposing party claims through the estate,
RCW 5.60.030 applies if the testimony offered involves a transaction with the deceased
or communication by the deceased to the witness or in the presence of the witness."
Thor v. McDearmid, 63 Wn. App. 193, 199, 817 P.2d 1380 (1991). The test is "whether
the deceased, if living, could contradict the witness of his own knowledge." Thor, 63
Wn. App. at 199 (citing King v. Clodfelter, 10 Wn. App. 514, 516, 518 P.2d 206 (1974)).
Rozgay's testimony concerns uncorroborated conversations with Barbara, where
she purportedly asked him to withdraw funds from the estate to benefit a property to
which he had a future interest in. These withdrawals, if improper, would be adverse to
-25- No. 74636-7-1/26
the estate, and are certainly adverse to the other beneficiaries of the Cordes trust.
Although the statute does exclude "parties of record who sue or defend in a
representative or fiduciary capacity, and have no other or further interest in the action,"
as the claim specifically asserts Rozgay improperly withdrew funds for his own benefit,
he clearly maintains an interest in the action. RCW 5.60.030. Thus, this testimony is
inadmissible under RCW 5.60.030.
Even considering Rozgay's testimony regarding Barbara's statements, there
remains a question of fact as to whether Rozgay breached his fiduciary duty as trustee.
Rozgay's testimony is the only evidence that Barbara wanted money transferred from
the Cordes trust to pay for repairs on the Hood Canal house. A reasonable fact-finder
could determine that Rozgay's testimony was not credible, and that he intentionally
withdrew funds from the Cordes trust to the detriment of other trustee beneficiaries.
Rozgay admitted to writing and signing Barbara's checks. And the evidence shows that
these withdrawals weren't classified as expenditures on Barbara's behalf until after she
had died. Both raise suspicion as to Rozgay's credibility. The trial court erred in
granting summary judgment and dismissing Hansen's claim that Rozgay breached his
fiduciary duty to the Cordes trust.°
Order on Summary Judgment
Hansen next challenges the form of the trial court's order granting summary
judgment. CR 56(h) provides, "[t]he order granting or denying the motion for summary
a Hansen also claims Rozgay breached his fiduciary duties in his administration of the Irrevocable Trust, including using his personal funds to update the Hood Canal house. Hansen admits that she Is not a beneficiary to the Irrevocable Trusts and was not entitled to an accounting for these trusts. The trial court did not err in dismissing Hansen's claim.
-26- No. 74636-7-1/27
judgment shall designate the documents and other evidence called to the attention of
the trial court before the order on summary judgment was entered." Here, the order
granting summary stated only that "the Court has reviewed and considered the files and
pleadings in this case, including without limitation, the following: (1) Defendants' Motion
for Summary judgment and all supporting declarations; (2) Plaintiff Hansen's Response
to Defendant's Motion for Summary Judgment and all supporting declarations; and (3)
Defendants' Reply In Support of Defendants' Motion for Summary Judgment and all
supporting declarations." The order was deficient in failing to itemize the evidence
considered.
While the order failed to itemize the individual declarations and evidence
considered, the evidence considered was included in the clerk's papers before us on
appeal and appears undisputed. Any error in failing to itemize evidence considered was
harmless. See W.R. Grace & Co. v. Dealt of Revenue, 137 Wn.2d 580, 591, 973 P.2d
1011 (1999).
Attorney Fees
Hansen finally challenges the trial court's award of attorney fees and costs.
Because we reverse the trial court on at least some of Hansen's claims, and because
the trial court did not segregate the fees awarded by claim, we vacate the award of
attorney fees. The parties may seek appropriate fees and costs after trial.
-27- No. 74636-7-1/28
CONCLUSION
We affirm the trial court's decision dismissing: (1) Hansen's challenge to the
estate planning documents for lack of capacity, (2) Hansen's claim for removal of
Rozgay as attorney-in-fact for Clarence Rozgay, and (3) Hansen's claim that Rozgay
breached his fiduciary duty to the Rozgay Family trusts or LLC.
We reverse the trial court's decision: (1) dismissing Hansen's challenge to the
estate planning documents for undue influence, (2) dismissing Hansen's challenge
because it was time barred, (3) dismissing Hansen's claim that Rozgay breached his
fiduciary duty to the Cordes trust, and (4) striking the declaration of Hansen's expert.
We vacate the trial court's award of attorney fees.
WE CONCUR:
-28-