Estate of Ashlock - Case Brief

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Estate of Ashlock

Case Number: F078083

Court: Cal. Ct. App.

Date Filed: 2020-03-03

Case Brief – Estate of Ashlock

Court: COURT OF APPEAL OF THE STATE OF CALIFORNIA
Date: 2025-09-05
Case Number: F078083
Disposition: The appellate court affirmed the trial court’s award of double damages under Probate Code § 859 for the misappropriated real‑property portfolio, affirmed several statutory surcharges, reversed the calculation of one surcharge, and remanded for further proceedings to correct the remaining mathematical errors and to recompute the § 859 penalty accordingly.

Holding

The court held that the trial court correctly applied Probate Code § 859’s “twice the value” penalty to the $5,148,000 of real‑property recovered, that the burden of proof rested on the fiduciary (Stacey Carlson) to substantiate her accountings, and that the trial court’s factual findings on the surcharges were supported by substantial evidence; however, the court reversed the erroneous calculation of the $27,624.20 surcharge, ordered a remand for recalculation, and affirmed the remainder of the judgment.

Narrative

Lead

In a sprawling probate dispute that has now produced three appellate opinions, the Fifth District Court of Appeal resolved the most financially consequential issue: whether the $11‑million judgment against former attorney‑in‑fact and executor Stacey Carlson should be measured by a “double” or a “triple” penalty under Probate Code § 859. The court’s decision not only cemented the statutory interpretation of § 859 but also clarified the evidentiary standards that govern fiduciary‑accountability surcharges, sending a clear signal to California probate practitioners about the limits of post‑trial challenges.

Procedural History

The litigation began after Lonnie Lamont Ashlock died in October 2013. His son, Gabriel Ashlock, and his daughter‑in‑law, Stacey Carlson, immediately entered into a bitter contest over a 2009 handwritten will that named Carlson as sole beneficiary and a series of 2013 trusts that Carlson had drafted on Ashlock’s behalf. The Superior Court of Stanislaus County consolidated the will‑contestation, a trust‑petition under Probate Code §§ 850‑852, and a breach‑of‑fiduciary‑duty claim. After a 53‑day bench trial (Nov 2014–Feb 2016), the trial court entered an “Interim Judgment” (Ashlock I) that invalidated the 2009 will, declared the 2013 trusts void, imposed a constructive trust on 18 parcels of real property (valued at $5,148,000), and assessed a $365,152.92 surcharge for estate‑related legal expenses.

Subsequent proceedings addressed damages and remedies. In March 2018 the trial court issued a “Second Statement of Decision” on accounting and damages, which the parties objected to. Minute orders on July 13 2018 incorporated the objections and produced a modified judgment (the “Second Statement of Decision” as amended). Gabriel appealed the judgment; Stacey filed a notice of appeal in the earlier Ashlock I case, and the appellate court affirmed that decision (Ashlock I). A second appeal (Ashlock II) affirmed an award of attorney fees. The present appeal—Ashlock III—concerns the bifurcated damages phase, specifically the calculation of statutory penalties and the sufficiency of the evidence supporting five separate surcharges.

Facts

The core factual dispute centers on Carlson’s conduct as Lonnie’s attorney‑in‑fact (Power of Attorney granted 2005) and as a purported partner in two “sham” partnerships—Little Hills Ranch and Investwest Properties—created in 2009. Carlson transferred title to 18 parcels of Lonnie’s real estate into the name of Investwest, then deeded those parcels into the invalidated 2013 trusts. She also commingled income from the Snelling Ranch (190‑acre almond operation) with personal funds in a QuickBooks‑generated account (Bank of West, acct. 5255).

Key transactions include:

  • A $350,000 transfer from acct. 5255 to a custodial account for a minor (June 24 2015), made one day before the Special Administrator took possession of the estate.
  • A $100,000 “cash” check drawn on Lonnie’s Bank of America account (acct. 3157) on Jan 12 2008, allegedly deposited into Carlson’s “Lonnie Ashlock dba Ashlock Ranches” account (Bank West, acct. 8112) on Nov 12 2008.
  • A series of wire transfers from Lonnie’s personal Bank West account (acct. 6905) in March 2014 totaling $16,608.85, which Carlson moved into her own account (acct. 0371).
  • Payments to attorneys (Crabtree Schmidt and Ronald Sarhad) and to the IRS that the trial court treated as unaccounted for.
  • A $6,000 wire to a third‑party “Robert Reyes” for alleged harvest labor, and a $40,000 surcharge for a gun collection the estate claimed ownership of.

The trial court, relying on forensic accountant testimony (Christopher Kelley) and rejecting Carlson’s self‑prepared QuickBooks reports as unreliable, found that Carlson failed to provide independent documentation for the above transactions and imposed surcharges of $300,000, $100,000, $27,624.20, $6,000, and $40,000 respectively. Under § 859, the court then doubled the total misappropriated amount—$5,148,000 in real property plus $838,777.12 in cash/personal property—to arrive at a $10,296,000 penalty for the property and a $1,677,554.24 penalty for the cash surcharges, for a combined liability of $11,973,554.20.

Issues

  1. Statutory Interpretation: Does Probate Code § 859 impose a “double” or “triple” penalty on the value of property recovered under §§ 850‑852?
  2. Law of the Case / Forfeiture: May Carlson revive arguments previously rejected in Ashlock I, particularly challenges to the appraisal of the 18 parcels and to the existence of “offset” credits?
  3. Standard of Review / Burden of Proof: Who bears the burden of proof on fiduciary accounting disputes, and what standard governs appellate review of the trial court’s factual findings?
  4. Sufficiency of Evidence: Are the five surcharges supported by substantial evidence, or do mathematical or evidentiary errors require reversal?

Court’s Reasoning

1. Interpretation of § 859

The appellate court examined the plain language of § 859, which provides that a party “who wrongfully takes” property “shall be liable for twice the value of the property recovered” in addition to any other remedies. The court rejected Carlson’s contention that the statutory phrase “twice the value” was a typographical error for “triple,” noting that the Legislature’s intent is clear from the statutory history and from analogous provisions (e.g., § 850). The court also emphasized that the trial court’s award of $10,296,000—exactly twice the $5,148,000 valuation—conforms to the statutory text. Accordingly, the “double‑damage” rule stands.

2. Law of the Case and Forfeiture

Invoking Kowis v. Howard, the court affirmed that issues already decided in Ashlock I constitute law of the case and are binding on the lower court and on this appeal. Carlson’s attempts to relitigate the appraisal of the 18 parcels, the existence of third‑party interests, and the offset‑credit claims were deemed forfeited because they were not raised in the opening brief of the present appeal. The court exercised its discretion to consider the statutory‑interpretation argument—despite its late filing—because it presented a novel question of law, but it declined to entertain the other forfeited arguments.

3. Burden of Proof and Standard of Review

The court reiterated the principle from Purdy v. Johnson: the fiduciary (here, Carlson) bears the burden of proving the correctness of each accounting entry. The trial court correctly shifted the burden to Carlson, who failed to produce independent documentation for the disputed transactions. On appeal, the court applied the “substantial evidence” standard articulated in Shaw v. County of Santa Cruz and Bookout v. Dept. of Transportation: because the trial court’s findings were based on a factual record that did not compel a contrary conclusion, the appellate court could not overturn them absent a clear error.

4. Surcharges

  • $300,000 surcharge (Snelling Ranch funds): The court found the evidence—particularly the lack of third‑party corroboration for the QuickBooks entries—insufficient to overcome the trial court’s credibility determination. The surcharge stands.

  • $100,000 surcharge (cash check): The court held that Carlson’s speculative explanation for the check’s date was unsupported; the trial court’s finding that the check was written on Jan 12 2008 and not properly accounted for was upheld.

  • $27,624.20 surcharge (wire transfers and attorney payments): The court identified a mathematical error. The trial court had combined wire transfers ($16,608.85) with attorney payments and an interest credit, arriving at $27,624.20. Because the record showed ambiguity about whether the attorney payments were intended to be part of the surcharge, the appellate court reversed the portion of the surcharge not tied to the undisputed wire transfers and remanded for recalculation.

  • $6,000 surcharge (Robert Reyes payment): The court affirmed the surcharge, finding Carlson’s testimony unreliable under Evidence Code § 412 and concluding the payment was a gratuitous transfer of estate funds.

  • $40,000 surcharge (gun collection): The court held the claim untimely; the issue was already resolved in Ashlock I and therefore barred by the law of the case. The surcharge remains.

Finally, the court ordered that the total § 859 penalty be recomputed to reflect the corrected surcharge amount after remand.

Closing Analysis

The decision solidifies two pivotal doctrines for California probate practice. First, it confirms that § 859’s “twice the value” penalty is to be applied literally, dispelling any lingering speculation that the Legislature intended a harsher “triple” sanction. Practitioners must therefore anticipate that a successful “wrongful taking” claim will automatically double the value of the misappropriated assets, a figure that can quickly eclipse the underlying principal.

Second, the opinion underscores the rigorous evidentiary burden placed on fiduciaries who invoke a Power of Attorney or partnership defenses to shield alleged misappropriations. The court’s reliance on Purdy and Shaw signals that self‑generated accounting records, even when prepared by a CPA, will not survive scrutiny absent independent corroboration. The appellate deference to the trial court’s credibility determinations, coupled with the strict enforcement of the law‑of‑the‑case doctrine, warns attorneys that new arguments must be raised early and fully articulated in the opening brief; otherwise, they will be forfeited.

Unresolved issues remain, notably the precise methodology for calculating surcharges that involve mixed‑purpose expenditures (e.g., attorney fees that may serve both estate and personal interests). The remand will require the trial court to articulate a clear, mathematically sound formula, potentially prompting future appellate guidance on the interaction between § 859 penalties and partial surcharges. Additionally, the opinion leaves open the question of whether a fiduciary who creates a “sham” partnership can ever invoke partnership defenses in a § 850 action—a point that may surface in subsequent litigation.

Overall, the Fifth District’s ruling provides a comprehensive roadmap for navigating the intersection of statutory penalties, fiduciary accounting, and procedural discipline in California probate litigation.

Referenced Statutes and Doctrines

  • Probate Code §§ 850‑852 – actions for recovery of property wrongfully taken.
  • Probate Code § 859 – penalty of “twice the value” of property recovered.
  • Probate Code § 1064(b) – filing of an account deemed a petition for approval.
  • Evidence Code § 412 – adverse inference when a party fails to produce stronger evidence.
  • California Rules of Court 8.1105(b), 8.1110 – certification for partial publication.
  • Law of the Case Doctrine – Kowis v. Howard (1992) 3 Cal.4th 888.
  • Burden of Proof in Fiduciary Accounting – Purdy v. Johnson (1917) 174 Cal. 521.
  • Standard of Review for Surcharges – Shaw v. County of Santa Cruz (2008) 170 Cal.App.4th 229; Bookout v. Dept. of Transportation (2010) 186 Cal.App.4th 1478.
  • Forfeiture of Issues in Reply Briefs – Varjabedian v. City of Madera (1977) 20 Cal.3d 285; Christoff v. Union Pacific Railroad Co. (2005) 134 Cal.App.4th 118.
  • Credibility and Evidentiary Weight – Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875; Goehring v. Chapman University (2004) 121 Cal.App.4th 353.