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East Bay Estate Litigation Attorneys | Constructive Trusts

Constructive Trusts Alameda Estate Litigation.jpgAt Hackard Law we focus on estate, trust and elder financial abuse litigation. We generally litigate these cases on behalf heirs and beneficiaries who have been cut out of estate plans by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful acts.

Our Hackard Law team regularly meets and shares experience, strategies and recent events. A busy practice finds us at different points on the California map each week. In recent weeks we've spent a fair amount of time in Northern California and East Bay counties - including San Mateo, San Francisco, Alameda, Contra Costa, Lake and of course, Sacramento.

I like to share insights gained from our practice, and today I want to share some insights regarding constructive trusts. The purpose of a constructive trust is in part to allow a plaintiff to recover an asset even if he has no legal title to it if certain conditions are met - among them - that in equity and good conscience, the asset belongs to him in spite of the defendant's legal ownership. It is a procedural equitable device designed to administer complete justice between the litigants.

So, how does this arise? A few early American examples come from the 1890s and the 1920s.

  • A 19th-Century cad purchased land with funds provided by his fiancĂ©. The fiancĂ© sued him, and the Court ordered that the land was subject to a constructive trust in her favor because the cad (or defendant) obtained the funds by virtue of a fraudulent promise of marriage.
  • A 1927 case describes a situation where the defendant received furs that he knew had been stolen from the plaintiff. The defendant sold the furs and made a large profit. The Court charged the money proceeds with a constructive trust, and the proceeds were delivered to the plaintiff.

California has its own particular statute to address the remedy of a constructive trust. California Civil Code Section 2224 states that,

"One who gains a thing by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act, is, unless he or she has some other and better right thereto, an involuntary trustee of the thing gained, for the benefit of the person who would otherwise have had it."

Now that we've heard about the California statute, I can share some case examples. The particular circumstances have been changed to protect client confidentialities, but the essence of the cases has not been lost.

The brother of an 80-year-old Alameda County homeowner tells his sister that she should transfer her house to him so that she will be eligible for certain public benefits. He tells her that the house will still be hers and that he is only doing this to help her out. The 80-year-old sister has Alzheimer's and is not really sure what her brother is saying. She trusts him and transfers the house to him.

I've seen a two different fact patterns that arise from these circumstances. They are:

  1. The brother keeps the house and denies that his sister has any type of interest in the house - legal or equitable; or
  2. The brother sells the house and puts the proceeds from the sale in his bank accounts.

While the 80-year-old lady with Alzheimer's might not know what to do, her daughter does - call a lawyer. This just isn't right. If she calls us, we start with a strong desire to hear her story and her mother's story. Once we've heard the story, we will likely identify a number of viable legal solutions to remedy the wrongdoing.

For now, let's just focus on one; that is, the constructive trust. We reach the conclusion that the brother gained the house by fraud. Fraud includes making a promise with no intent to perform.

Brother promised he would hold the house for her benefit, and he either kept it or sold it and took the proceeds for his own benefit.

The 80-year-old sister in equity and good conscience has the better right to the house. The brother is an involuntary trustee of the house or the proceeds from the sale of the house. The court should hold that the defendant brother holds the house or its proceeds in constructive trust for his sister and the house should be transferred back to his sister. Of course, there can be other damages assessed under a number of other legal theories.

Remember that a constructive trust can be imposed for reasons other than fraud - including mistake, undue influence, the violation of a trust or other wrongful act. Each case, like each plaintiff, each family, has its own particulars.

If you would like us to hear your story, call us at 916 313-3030. We represent clients in California's major urban areas, including the East Bay. We focus on substantial cases where we think that we can make a significant difference and there is a party who can be made financially responsible for his or her wrongdoing. We'll be glad to see how we can best help you.

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