[Cite as Castro v. Castro,

.]

Court of Appeals of Ohio EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

JOURNAL ENTRY AND OPINION No. 98710

DAVID K. CASTRO, ADMINISTRATOR OF THE ESTATE OF VERA BATES-LUCAS PLAINTIFF-APPELLANT

vs.

JOSEPH CASTRO, ET AL. DEFENDANTS-APPELLEES

JUDGMENT: REVERSED AND REMANDED

Civil Appeal from the Cuyahoga County Court of Common Pleas Probate Court Division Case No. 2012 ADV 175321

BEFORE: S. Gallagher, P.J., Kilbane, J., and E.T. Gallagher, J.

RELEASED AND JOURNALIZED: April 4, 2013 ATTORNEY FOR APPELLANT

Mark D. McGraw 1370 Ontario Street Suite 800 Cleveland, OH 44113

ATTORNEYS FOR APPELLEES

James H. Hewitt, III Hewitt Law L.L.C. The Groh Mansion 3043 Superior Avenue Cleveland, OH 44114

Matthew T. Fitzsimmons, III Nicola, Gudbranson & Cooper 25 West Prospect Avenue Republic Building, Suite 1400 Cleveland, OH 44115

For Andrea H. Castro

Andrea Horton Castro, pro se 2163 Rock Mountain Lake Drive McCalla, AL 35111

Also listed:

For KeyBank

Karen L. Giffen Giffen & Kaminski, L.L.C. 1300 East Ninth Street Suite 1600 Cleveland, OH 44114 SEAN C. GALLAGHER, P.J.:

{¶1} Plaintiff-appellant, David Castro (“David”), Administrator of the Estate of

Vera Bates-Lucas, appeals the judgment of the Cuyahoga County Court of Common

Pleas, Probate Division, that denied his complaint and dismissed the action. For the

reasons stated herein, we reverse the decision of the trial court and remand the matter for

a new trial.

{¶2} David brought a concealment action against defendants-appellees, Joseph

Castro (“Joseph”) and Andrea Horton Castro (“Andrea”), alleging that appellees

concealed, embezzled, or conveyed estate assets pursuant to R.C. 2109.50. David and

Joseph are brothers, and they are the sons of Vera Bates-Lucas, who is deceased. Andrea

is Joseph’s wife.

{¶3} Several banks were also named as defendants in the amended complaint.

However, Fifth Third Bank and Wells Fargo Bank were voluntarily dismissed from the

action, and David represents that KeyBank was inadvertently left in the action.1 The

accounts at issue in this matter shall be referred to using the bank’s name followed by the

last four digits of the account number.

{¶4} During discovery, David filed a motion to compel answers and responses to

discovery, as well as a supplemental brief in support of his motion. David indicated that

“[c]ontrary to [Joseph’s] response to Request for Production no. 7, he has not provided a

1 KeyBank has not made an appearance on appeal. copy of any power of attorney executed in his favor by Vera Bates-Lucas.” The trial

court never ruled on this motion.

{¶5} A hearing was held on June 11, 2012.2 At the hearing, Joseph testified that

his mother Vera lived with him from 1989 until her death in March 2011. Joseph

claimed at some point he was given a power of attorney to take care of her financial

affairs. Joseph testified that he and Vera drafted the power of attorney. He could not

remember when he was given the power of attorney, other than it being after Vera’s

retirement. He also did not know what powers it gave him. He further testified that it

was a standard power of attorney that he printed off the Internet. This document was

never introduced at trial, and neither David nor his counsel was provided with a copy of

the power of attorney.

{¶6} Vera suffered a stroke in 2008 that affected her manual dexterity, including

her ability to write and to walk. She also was no longer driving a car at this time. Vera

moved with Joseph to Alabama in March 2009, which was shortly after Joseph had

married Andrea.

{¶7} Vera had several joint accounts with Joseph, including KeyBank 1793 (its

predecessor account was KeyBank 4685), KeyBank 6122, and Fifth Third 7767. The

accounts were referred to as joint accounts, and it is unclear whether there was any right

of survivorship, although there was limited testimony that KeyBank 6122 was a joint and

2 At this hearing, the trial court also considered a motion to remove David as the administrator of Vera’s estate, which was filed in a separate estate action that is not before us in this appeal. See Castro v. Castro, 8th Dist. No. 99037. survivor account. Vera also had her own account, KeyBank 3488, that was payable on

death to David. Joseph had his own personal accounts, Fifth Third 5380 and 6182 (its

predecessor account was Fifth Third 2374). Defense counsel stipulated to the accounts

that were reviewed.

{¶8} Joseph testified that he did not deposit any of his own money into any

KeyBank account. He conceded that Vera’s bills would have been paid from the

KeyBank accounts and that prior to moving to Alabama there were certain expenses they

were splitting. However, he did not pay any of his own bills from the KeyBank

accounts. Further, Joseph indicated that after moving to Alabama, Vera did not have to

pay any of the bills.

{¶9} It was represented that on May 1, 2006, KeyBank 4685 was closed, and the

balance of $62,366.68 was transferred into KeyBank 1793. Joseph testified that he only

did as his mother instructed of him. Joseph was unsure if on May 18, 2009, $86,000 was

transferred from KeyBank 1793 to KeyBank 6122. Joseph conceded that on October 7,

2009, KeyBank 6122 was closed with a withdrawal of $86,127.94. He was not sure if

this money was used to open his own high performance money market account, Wachovia

8516, on or about October 16, 2009.

{¶10} Joseph conceded that on March 28, 2009, he withdrew $80,000 in cash from

KeyBank 3488, which is the account that is payable on death to David. He denied

putting the funds into his safety deposit box and claimed he put the cash into his

82-year-old mother’s hands. He admitted that on July 2, 2010, he visited his safety deposit box at Fifth Third Bank. On that same date, he deposited $60,000 into his

personal account, Fifth Third 6182. Though Joseph denied making this deposit, defense

counsel stipulated that Joseph deposited in two transactions $20,000 and $40,000 into his

account, Fifth Third 6182. Also on July 2, 2010, Joseph purchased an official check for

$40,000 at Fifth Third. Six months later, on January 11, 2011, Joseph deposited the

$40,000 official check into Wachovia 1192, which was a joint account with Vera.

Defense counsel stipulated to Joseph’s deposit of the $40,000 official check he had

purchased on July 2, 2010. On January 13, 2011, $32,000 was withdrawn from

Wachovia 1192. It was stipulated that on February 3, 2012, Joseph deposited a check

made out to cash in the amount of $20,000 into Wachovia 1192. Joseph was unable to

account for money that had been withdrawn.

{¶11} During the hearing, the judge questioned why plaintiff’s counsel was

referencing Joseph’s personal accounts and stated they should not matter, indicated that

other accounts were joint accounts, and expressed uncertainty as to evidence of

concealment. Joseph was evasive in his answers and was unable to recall many details

concerning the accounts or to explain what was done with money that was withdrawn or

to state the purpose for depositing or transferring the funds.

{¶12} Joseph’s wife, Andrea, was paid $5,000 per month for a year to take care of

Vera. This was done pursuant to a contract between Andrea and Vera, and to which

Joseph signed as a witness. Andrea was a licensed nurse who had worked for the VA.

Joseph could not disagree that the funds were paid from Wachovia 8516. {¶13} Joseph also testified that his mother paid one year of mortgage payments as

a wedding gift. The money was deducted from Fifth Third 7767. Fifth Third 7767 was

closed in June 2011.

{¶14} Tenisha Smith Bugsby is Joseph’s daughter and Vera’s granddaughter. She

testified that Vera did not want to move to Alabama because of the relationship Vera had

with Andrea. She also indicated that Joseph told her he only had a medical power of

attorney.

{¶15} David testified that when he asked Joseph about Vera’s will and insurance

paperwork, Joseph claimed he did not know where they were located. David also

testified that after November 2010, when he would call to speak with Vera, Joseph would

indicate that she was occupied and that he would have her call back, but she never did.

Joseph never informed David about the $80,000 cash withdrawal that had been made

from KeyBank 3488, which was the payable-on-death account. David did not believe

this amount of money had been handed to his mother and indicated that Andrea was not

caring for Vera at the time this withdrawal was made. David testified that Joseph told

him that, out of the goodness of his heart, he was going to send David $3,000. David

never received this money. David presented various documents in support of his claims.

The trial court would not admit the bank records proffered by David.

{¶16} The trial court issued a judgment entry in which it found “that no proof

having been offered to support the Complaint, that the Complaint is hereby denied and

dismissed.” The court determined that there was no evidence of undue influence or of incapacity of the decedent and that “there was no evidence that defendant Joseph Castro

concealed, embezzled or conveyed monies from any account held by the decedent.”

David timely filed this appeal.

{¶17} As an initial matter, we recognize claims for concealing or having

wrongfully conveyed away property of an estate inter vivos, pursuant to R.C. 2109.50, are

within the probate court’s jurisdiction where the property at issue will revert to the estate

if the transfers are declared invalid. See Tewksbury v. Tewksbury, 4th Dist No.

07CA771,

; Bobko v. Sagen,

,

(8th Dist. 1989). Further, “[a] probate court has jurisdiction to entertain an

action against an attorney-in-fact for concealed or embezzled assets withdrawn with a

power of attorney.” Burwell v. Rains, 11th Dist. No. 2004-T-0042,

, citing Fox v. Stockmaster, 3d Dist. Nos. 13-01-34 and 13-01-35,

, ¶

63.

{¶18} David raises four assignments of error for our review. His first assignment

of error provides as follows:

The trial court committed reversible error in finding that plaintiff-appellant had presented no proof the defendants had illegally concealed, embezzled or conveyed away assets of the estate of Vera Bates-Lucas, and in dismissing the complaint.

{¶19} We review the trial court’s judgment to determine whether it is against the

manifest weight of the evidence. The weight of the evidence concerns “‘the inclination

of the greater amount of credible evidence, offered at trial, to support one side of the

issue rather than the other [and] indicates clearly to the jury that the party having the burden of proof will be entitled to their verdict.’” (Emphasis sic.) Eastley v. Volkman,

,

,

, ¶ 12, quoting State v. Thompkins,

,

,

. When conducting a manifest

weight review, the reviewing court must weigh the evidence and all reasonable

inferences, consider the credibility of witnesses, and determine whether in resolving

conflicts in the evidence, the finder of fact clearly lost its way and created such a manifest

miscarriage of justice that the judgment must be reversed and a new trial ordered.

Eastley at ¶ 20, citing Tewarson v. Simon,

,

(9th Dist. 2001).

{¶20} This is a concealment action that was brought under R.C. 2109.50, which

permits a complaint to be made to the probate court “against any person suspected of

having concealed, embezzled, or conveyed away or of being or having been in the

possession of any moneys * * * of the estate[.]” David claims that Joseph unlawfully

concealed, embezzled, and conveyed away assets from the estate of Vera Bates-Lucas by

diverting substantial sums of money from various bank accounts.

{¶21} A number of the bank accounts at issue were joint accounts under Vera’s

and Joseph’s names, and one of the accounts was a payable-on-death account to David

under Vera’s name. There was evidence presented at the hearing reflecting that Joseph,

who claimed to have a power of attorney, withdrew and/or transferred large sums of

money from these accounts, thereby depleting the bank accounts. Thereafter, he made

large deposits into his own personal accounts (Fifth Third 6182 and Wachovia 8516) and another joint account (Wachovia 1192), which he had opened. He also utilized a safety

deposit box in the course of certain transactions.

{¶22} While the trial court may not have understood why Joseph’s personal

accounts were being referenced, it is evident that these were accounts in which some of

the funds allegedly were being concealed. Further, insofar as certain accounts may have

been omitted from the complaint, it is apparent that the complaint listed nearly all the

accounts at issue, including the accounts from which funds had been depleted. It seems

as though the trial court was focused on the joint nature of certain accounts and Joseph’s

claim that he had a power of attorney. Our review reflects that the trial court failed to

properly consider the evidence presented and erred in its application of law and the

burden of proof in this matter.

{¶23} The Ohio Supreme Court has distinguished rights with regard to joint and

survivorship accounts and joint accounts without survivorship, stating as follows:

[T]he opening of an account in joint and survivorship form shall, in the absence of fraud, duress, undue influence or lack of mental capacity on the part of the depositor, be conclusive evidence of the depositor’s intention to transfer to the survivor the balance remaining in the account at the depositor’s death.

On the other hand, in order to maintain consistency in the treatment of survivorship rights, we hold that the opening of the account in joint or alternative form without a provision for survivorship shall be conclusive evidence, in the absence of fraud or mistake, of the depositor’s intention not to transfer a survivorship interest to the joint party in the balance of funds contributed by the depositor remaining in the account at the depositor’s death. Such funds shall belong exclusively to the depositor’s estate, subject only to claims arising under other rules of law. Wright v. Bloom,

,

(1994). In this case, there was

a lack of evidence pertaining to the nature of the joint accounts. Further, even if an

account contains a provision for survivorship, it is established that “‘[a] joint and

survivorship account belongs, during the lifetime of all parties, to the parties in proportion

to the net contributions by each to the sums on deposit, unless there is clear and

convincing evidence of a different intent.’” Id. at 601, quoting In re Estate of Thompson,

,

(1981), paragraph one of the syllabus.

{¶24} Here, Joseph testified that he did not contribute any money to the KeyBank

accounts. Thus, the money in these accounts belonged to Vera during her lifetime.

Insofar as Joseph claimed to have a power of attorney and that he only did as instructed

by Vera, it was his burden to show that his conduct was free of undue influence or fraud.

When a fiduciary relationship exists between the depositor and the beneficiary of a joint

and survivorship account, a presumption of undue influence arises and the beneficiary

carries the burden to show by a preponderance of the evidence that the transaction was

free from undue influence or fraud. See Kasick v. Kobelak,

,

,

(8th Dist.); Rusnak v. Fleming,

,

,

, ¶ 12 (C.P.); Mileski v. Petrilli, 11th Dist.

No. 89-T-4188,

, * 4-6 (Mar. 30, 1990).

{¶25} Insofar as Joseph created any joint and survivor accounts into which funds

were placed, when funds are transferred into a joint and survivorship account under a

power of attorney, “the presumption in Wright applies only to the funds that the owner of the funds knew to be in the survivorship accounts.” Gotthardt v. Candle,

,

(7th Dist. 1999). Additionally, because he

claimed he had a power of attorney, the burden was upon Joseph to account for the money

withdrawn from Vera’s KeyBank account that was payable on death to David.

{¶26} At the hearing, Joseph offered no explanation for the various transactions

that were made and he failed to account for monies that had been withdrawn or

transferred into other accounts. Joseph’s use of multiple accounts and his shifting

monies from one account to another support an inference that he was attempting to

conceal the money that was taken. See Mancz v. McHenry, 2d Dist. No. 24728,

,

, ¶ 71. While he claimed the $80,000 cash withdrawn

from the payable-on-death account was placed into his mother’s hands, he offered no

explanation for the withdrawal or what became of the money. Further, there was

evidence to suggest that he placed the money into his safe deposit box and later deposited

$60,000 into his personal account. Also, there was evidence that he transferred funds out

of the joint accounts, closed several of these accounts, and opened a high performance

money market account and a separate joint and survivor account into which he deposited

money. Because Joseph stood in a fiduciary relationship with Vera, he had a duty to

account for the transactions he was making. The trial court erred by failing to place the

burden on Joseph to show that his conduct was free of undue influence or fraud.

{¶27} Joseph also paid Andrea $5,000 per month for the care of Vera. He could

not disagree that the funds came from Wachovia 8516, which was a personal account he opened after closing KeyBank 6122 and withdrawing funds therefrom. A contract was

signed with a scribble that Joseph stated was Vera’s signature. Joseph signed the

contract as a witness and is referred to as Vera’s attorney-in-fact. The contract was dated

March 11, 2010. Joseph testified that by May 2009, he would take Vera to the bank “if

she was in her right mind.” There also was testimony from Joseph’s daughter suggesting

that Vera did not get along with Andrea. No testimony was offered as to the care that

was provided or the reasonableness of the amount paid.

{¶28} Self-dealing by a fiduciary creates a presumption that the action is invalid,

and an attorney-in-fact is obligated to demonstrate the fairness of his conduct. Bacon v.

Donnet, 9th Dist. No. 21201,

, ¶ 30. Joseph failed to offer any evidence

to rebut the presumption that he engaged in improper self-dealing and/or unduly

influenced Vera.

{¶29} Likewise, there is a presumption that the payments for one year of Joseph’s

mortgage as a wedding gift was invalid. “Because a fiduciary relationship existed

between the decedent and [the donee], the law presumes the invalidity of the gifts. * * *

To overcome the presumption, the donee must show * * * that the donor intended to make

a gift.” Tewksbury v. Tewksbury, 4th Dist. No. 07CA771,

; see

also Fife v. Beck,

, 455-456,

(1956).

{¶30} Upon our review, we find the trial court failed to place the appropriate

burden upon Joseph and failed to consider and determine the issues in accordance with

the appropriate legal standards discussed herein. We also find that the trial court’s decision was not supported by the manifest weight of the evidence. Accordingly, we

must reverse the decision of the trial court and remand the matter for a new trial.

David’s first assignment of error is sustained.

{¶31} David’s second assignment of error provides as follows:

The probate court committed reversible error in hurrying through the hearing, cancelling closing argument and denying plaintiff his day in court.

{¶32} We recognize that at times the trial court appeared to move the proceeding

along in this matter and did not afford the parties an opportunity to present closing

arguments. However, no objection was made during the course of the hearing, and the

parties never requested to make closing arguments. Because we have already determined

that the action must be remanded for a new trial, we need not engage in any further

analysis and deem this assignment of error moot.

{¶33} David’s third assignment of error provides as follows:

The probate court abused its discretion and committed reversible error in denying plaintiff-appellant’s motion to compel discovery, and also in failing to order defense counsel to produce the power of attorney at the hearing.

{¶34} A review of the record reflects that the trial court never ruled on David’s

motion to compel discovery. A trial court’s failure to rule on a motion is ordinarily

presumed to be a denial of that motion for purposes of appellate review. Sabbatis v.

Burkey,

,

,

(5th Dist.), citing

State v. Olah,

,

,

(9th Dist.), fn. 2;

State ex rel. Cassels v. Dayton City School Dist. Bd. of Edn.,

,

(1994). We review the denial of a motion to compel discovery for an abuse of discretion. State ex rel. V Cos. v. Marshall,

,

,

. An abuse of discretion requires an unreasonable, arbitrary, or

unconscionable decision.

{¶35} In his motion to compel, David stated that he had not been provided with a

copy of the power of attorney that had purportedly been executed by Vera Bates-Lucas.

Civ.R. 26(B), which sets forth the scope of discovery, provides that in general, “[p]arties

may obtain discovery regarding any matter, not privileged, which is relevant to the subject

matter involved in the pending action * * *.”

{¶36} The power of attorney was relevant to the action because it shows a

fiduciary relationship existed between Joseph and the decedent. Not only does the holder

of a power of attorney have a fiduciary relationship with the principal, but also, the holder

bears the burden of proof in establishing the fairness of the transaction. In re Estate of

McCauley, 5th Dist. No. 2011CA00272,

. As previously

discussed, when a fiduciary relationship exists between the depositor of a joint account

and a beneficiary, there is a presumption that the transaction resulted from undue

influence, and the burden is on the beneficiary to rebut the presumption by a

preponderance of the evidence.

{¶37} At trial, Joseph could not recall when he was given the power of attorney,

and he did not know what powers it gave him. When asked about various transactions,

Joseph often denied the questions or expressed uncertainty. Further, he offered no evidence to show the fairness of the transactions or to rebut the presumption of undue

influence.

{¶38} Because the power of attorney was relevant to the action and the trial court’s

ruling was prejudicial to David’s substantial rights, we find that the trial court abused its

discretion in denying the motion to compel. David’s third assignment of error is

sustained. Upon remand, the trial court is instructed to compel Joseph to produce the

power of attorney.

{¶39} David’s fourth assignment of error provides as follows:

The probate court committed reversible error in not admitting the bank records proffered by the plaintiff.

{¶40} At the end of trial, David proferred numerous bank records that the trial

court did not admit into evidence. These documents were not authenticated during the

hearing. Nevertheless, the record reflects that Joseph’s counsel stipulated to various

accounts at issue. Also, there were certain stipulations, as well as testimony, regarding

pertinent transactions.

{¶41} Because this matter must be remanded for a new trial, David shall have the

opportunity to properly authenticate and introduce the bank records, or the parties may

stipulate to the same, upon remand. Further, nothing herein shall preclude David from

seeking leave to amend his complaint to list any omitted bank accounts that are relevant

to the action. Accordingly, we find that this assignment of error is moot.

{¶42} Judgment reversed; case remanded for a new trial.

It is ordered that appellant recover from appellees costs herein taxed. The court finds there were reasonable grounds for this appeal.

It is ordered that a special mandate issue out of this court directing the common

pleas court to carry this judgment into execution.

A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of

the Rules of Appellate Procedure.

SEAN C. GALLAGHER, PRESIDING JUDGE

MARY EILEEN KILBANE, J., and EILEEN T. GALLAGHER, J., CONCUR