[00:00:01] Speaker 04:
Inray Seegi, Afar Aviv appearing for appellant, Mark Murakami appearing for appellee.

[00:00:11] Speaker 00:
Good morning.

[00:00:11] Speaker 00:
Would you like to reserve any time for rebuttal?

[00:00:13] Speaker 03:
Yes, Your Honor.

[00:00:14] Speaker 03:
Five minutes, please.

[00:00:15] Speaker 00:
All right.

[00:00:15] Speaker 00:
Very good.

[00:00:16] Speaker 00:
Please begin.

[00:00:16] Speaker 03:
Okay.

[00:00:19] Speaker 03:
Good morning, members of the panel, honorables and both coming in.

[00:00:24] Speaker 03:
I would like to focus on the first session appeal in this case, which is really the courts to spawn the application of the under-influence standard in determining non-dischargeability under section 523.84 of the code.

[00:00:36] Speaker 03:
The focus on this is not so much about the issues that were laid out in the brief hour file.

[00:00:43] Speaker 03:
It's actually what I think is more important is the remedy in this case.

[00:00:47] Speaker 03:
So the court really made three, what I would say, central findings first.

[00:00:51] Speaker 03:
But in this case, the trust itself was valid.

[00:00:54] Speaker 03:
The second thing that Marilyn's appointment, which is the defendant, a successor as trustee was valid.

[00:01:02] Speaker 03:
The third one, I'm going to read it, that mother, which was the St.

[00:01:05] Speaker 03:
Laurent in this case, she designated herself as the primary beneficiary of the trust and provided that as long as I shall live, I will have the exclusive right to the use and benefit of the income and assets of this trust.

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In other words, during her lifetime, mother had the right to do whatever she wanted with trust assets.

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I mean, it could have been anything.

[00:01:24] Speaker 03:
She could have done it.

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She could have gambled it away.

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She could have donated.

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She had absolute discretion to do whatever she wanted with it.

[00:01:31] Speaker 03:
And more importantly, a man that she also had the absolute right to authorize Maryland as the trustee to make distributions out of the trust.

[00:01:39] Speaker 03:
Another thing is not in dispute.

[00:01:40] Speaker 02:
Wouldn't all of this been much more persuasive if the probate court had not found that we are bound, as I understand it, that there was a breach of fiduciary duty here?

[00:01:51] Speaker 03:
The breach of fiduciary duty in this particular case, if you look at the court's order, the probate level, it really has to do with the lack of accounting.

[00:02:00] Speaker 03:
The court did not make any findings regarding how to- Well, that's a chicken and egg situation, isn't it?

[00:02:04] Speaker 02:
Right?

[00:02:05] Speaker 02:
I mean, the lack of accounting leads to no comfort as to the use of the funds.

[00:02:16] Speaker 02:
So the lack of accounting

[00:02:18] Speaker 02:
is the controlling act from which all the ramifications follow.

[00:02:35] Speaker 03:
discharge for duties as a trustee.

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And the court says, you know, you didn't provide the proper accounting.

[00:02:40] Speaker 03:
All we're doing is removing you as a trustee.

[00:02:42] Speaker 03:
Are we going to assign the court to figure out what really happened there?

[00:02:45] Speaker 03:
Because there was no evidentiary hearing that there was nothing there presented to the court in a sense of determining what or any of the charges here, which is really the crux of it, were actually reasonable or authorized.

[00:02:57] Speaker 03:
The court didn't make any of those findings.

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The court said, you don't meet the standard as a trustee.

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Therefore, we are removing you.

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We're going to appoint a different successor trustee.

[00:03:06] Speaker 03:
In this case, you are no longer the trustee.

[00:03:08] Speaker 02:
And you've violated your fiduciary duties, which is the reason why we're appointing a successor trustee.

[00:03:13] Speaker 02:
Correct.

[00:03:13] Speaker 03:
But that is you discharge, correct, your duties as a fiduciary.

[00:03:19] Speaker 03:
But we are not talking at all about what are the remedies.

[00:03:22] Speaker 03:
What does that mean?

[00:03:23] Speaker 03:
Does that mean that all your actions are reasonable?

[00:03:27] Speaker 03:
It's possible that you didn't have any accounting at all.

[00:03:29] Speaker 03:
You did a terrible job as a trustee.

[00:03:32] Speaker 03:
But it doesn't change the fact that the actual spending of the money, because ultimately, we're looking at the money, was reasonable or authorized.

[00:03:40] Speaker 03:
That is two different things.

[00:03:41] Speaker 03:
The court did not decide that.

[00:03:44] Speaker 03:
Right.

[00:03:45] Speaker 02:
And that's because the bankruptcy was filed, and it shifted over to the non-dischargeability.

[00:03:50] Speaker 03:
Right.

[00:03:51] Speaker 03:
And essentially, that decision actually happened right here by Judge Farris in this action.

[00:03:59] Speaker 03:
Otherwise, it could have been differently.

[00:04:01] Speaker 03:
In this case, we could have had the, I forget the term for it in appropriate court, but the point is the court could have issued a judgment saying this is X amount of dollars that you have, you are under the standard of negligence.

[00:04:18] Speaker 03:
Okay, you are negligent and you owe X amount of dollars.

[00:04:20] Speaker 03:
And then all we would come here in the bankruptcy court to determine the non-dischargeability is really the culpability of those actions.

[00:04:28] Speaker 03:
But what happened here is all the court did said, you are no longer the trustee.

[00:04:32] Speaker 03:
I'm removing you.

[00:04:34] Speaker 03:
Now, let's see what happens next.

[00:04:36] Speaker 03:
And the bankruptcy was filed, correct, which stayed that action.

[00:04:39] Speaker 03:
And now everything, really, all of it was determined in this particular case.

[00:04:43] Speaker 03:
That is correct.

[00:04:46] Speaker 03:
Now, it is not a dispute that plaintiffs never argued or even mentioned the undue influence standard in their briefs anyway.

[00:04:55] Speaker 03:
It's just simply nowhere to be found.

[00:04:57] Speaker 03:
nor factually argued that Marilyn exercised undue influence on her mother to approve or authorize Marilyn's use of the funds.

[00:05:07] Speaker 03:
The record clearly shows it, and a plaintiff openly in her response brief does not deny it.

[00:05:13] Speaker 03:
So I think at this point, it is what it is.

[00:05:15] Speaker 03:
It was just never argued.

[00:05:17] Speaker 03:
The court's reliance on undue influence now, and in this case, the violations of defendant's constitutional right to due process under principle of party representation.

[00:05:25] Speaker 03:
Well, again, I think

[00:05:27] Speaker 02:
for what I've read the record and coming to it, the undue influence is a term that Judge Ferris used and dropped into a footnote.

[00:05:40] Speaker 02:
The mother's capacity and capability was litigated, right?

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I mean, that's why all the medical records were in there.

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That's why the notes are in there.

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That's why the letters were introduced.

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That's a substantial litigation of the mother's capacity.

[00:05:58] Speaker 02:
Whatever you want to call it at the end is what you call it.

[00:06:02] Speaker 02:
But that factual matter was squarely placed into the contest, wasn't it?

[00:06:08] Speaker 03:
The factual issue overall, yes.

[00:06:10] Speaker 03:
But the issue of under-influence, which is central to the decision, and it is way more than a footnote.

[00:06:18] Speaker 03:
It is way more than a footnote.

[00:06:19] Speaker 03:
I don't have time right now to go over it all a bit, but if you

[00:06:23] Speaker 03:
And I'm sure you have.

[00:06:24] Speaker 03:
But when you look again at the finding of facts and conclusion of law, this is far from infertile.

[00:06:30] Speaker 03:
That is actually central.

[00:06:32] Speaker 03:
Because the standard of defalcation, there are different standards that you can go around it, how to analyze it.

[00:06:41] Speaker 03:
One of them is undue influence.

[00:06:43] Speaker 03:
It is.

[00:06:43] Speaker 03:
The problem here, it was never argued.

[00:06:48] Speaker 02:
But you're putting a label, and Judge Farris put a label on it.

[00:06:52] Speaker 02:
If you, why is the label determinative and you are arguing was error, clear error, as opposed to the capacity which was clearly litigated?

[00:07:05] Speaker 03:
The capacity was litigated.

[00:07:07] Speaker 03:
But again, if you look at this case law that is being cited in support of the standard itself, the standard itself.

[00:07:16] Speaker 02:
But the action was not for undue influence.

[00:07:19] Speaker 02:
This was not a claim for undue influence.

[00:07:21] Speaker 02:
The claim, the litigation, as you mentioned, was for defalcation with the requisite intent.

[00:07:28] Speaker 02:
That's all that was trialed.

[00:07:31] Speaker 02:
Do you believe that is necessary that Judge Farris find

[00:07:35] Speaker 02:
that you could not award a judgment for non-dischargeability absent the undue influence?

[00:07:40] Speaker 02:
Yes.

[00:07:40] Speaker 02:
Why?

[00:07:41] Speaker 02:
What's your case for that?

[00:07:42] Speaker 02:
Oh, so I'm going to go through that a little bit.

[00:07:44] Speaker 02:
OK, so I'd like you to get to it.

[00:07:46] Speaker 02:
You got about seven minutes.

[00:07:47] Speaker 02:
I want you to reserve as much time as you can.

[00:07:49] Speaker 02:
So if you could address that, I'd be interested.

[00:07:51] Speaker 03:
Yes, because in this particular case, I'm going to jump a little bit further.

[00:07:55] Speaker 03:
I'm just going to quickly skip on my note.

[00:07:58] Speaker 03:
The sole argument of the plaintiff in this case was that Maryland decided to do as a trustee by intentionally misappropriating funds

[00:08:06] Speaker 03:
for herself and family's personal use.

[00:08:09] Speaker 03:
Her sole argument all along has been that all of her actions were at the instructions or request of her mother or expressly or impliedly authorized by her.

[00:08:20] Speaker 03:
That was her position, okay?

[00:08:22] Speaker 03:
In section C of the conclusion of law in determining Maryland's sinter, the court made the following key finding.

[00:08:29] Speaker 03:
Maryland attempts to justify many of her expenditures by claiming that mothers authorized them.

[00:08:33] Speaker 03:
But the trustee should not be allowed to follow the discretion of the law beneficiary if there are reasons to doubt the validity of the instructions or the authorization.

[00:08:41] Speaker 03:
This is part of the legal standard.

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That's where it's coming from.

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Marilyn knew that her mother's state had declined and that her mother totally depends on Marilyn's undue influence over her mother.

[00:08:52] Speaker 03:
And here is the key, even if Mother authorized some or all of the expenditures, Maryland was not entitled to rely on these instructions.

[00:09:01] Speaker 03:
The reason I say it's the key to this is this.

[00:09:05] Speaker 03:
If the court agrees, if the court agrees with our position, which is that this issue was raised suspante and meaning the issue of under, the legal standard of under influence that is addressed by the court and it is central to the finding.

[00:09:23] Speaker 03:
If you take that out, you end up with a finding of facts that are really saying what the court is saying here.

[00:09:29] Speaker 03:
I don't know whether Marilyn acted on her own or her mother authorized it.

[00:09:33] Speaker 03:
But it doesn't really matter because either way, she's on the hook because she either acted maliciously on her own or exercised undue influence over her mother.

[00:09:43] Speaker 03:
If you take, if you look at the finding of facts the way they are right now, and you understand that this was never argued, the court relied on the wrong legal standard, which is undue influence and was never briefed, should never have been allowed to use that in this case.

[00:09:57] Speaker 03:
Again, it's a legal standard and it is not a footnote.

[00:10:00] Speaker 03:
It is central.

[00:10:05] Speaker 02:
Why were the medical records, the notes, the letters, why were they introduced?

[00:10:11] Speaker 02:
What was the relevance of that?

[00:10:13] Speaker 02:
Why weren't they excluded?

[00:10:17] Speaker 03:
I think I don't see how they would be excluded.

[00:10:19] Speaker 03:
I think it's the overall... Why were they relevant then?

[00:10:22] Speaker 03:
They were relevant overall to show like to me it's the totality of circumstances.

[00:10:27] Speaker 03:
When you want to look what really happened there.

[00:10:30] Speaker 03:
That's, that's how I view it.

[00:10:31] Speaker 00:
I mean, so, but then wouldn't judge Ferris be entitled to make a conclusion based on the totality of circumstances.

[00:10:40] Speaker 00:
Including all these medical records that the mother mother's health was was in decline her mental health was in decline.

[00:10:47] Speaker 03:
he was able to make those findings of facts, yes.

[00:10:51] Speaker 03:
But the legal standard that was used was under influence because again, even if you conclude, I'll take it to the extreme.

[00:11:00] Speaker 03:
I'll take it to the extreme.

[00:11:01] Speaker 03:
And I'm just running out of time here at this point.

[00:11:04] Speaker 03:
I take it to the extreme and I say, Maryland in this particular case, I'm sorry.

[00:11:09] Speaker 03:
Yes, Your Honor.

[00:11:11] Speaker 04:
I just want to clarify that if you're right,

[00:11:15] Speaker 04:
and you didn't have the opportunity to address the question legally, then what you're asking us to do is remand back to Judge Farris to have him reconstitute the trial, give you notice of the claim of undue influence, and retry the case.

[00:11:32] Speaker 04:
That's what you want us to do.

[00:11:34] Speaker 03:
Actually, no.

[00:11:36] Speaker 03:
I don't think it's the correct remedy.

[00:11:37] Speaker 03:
I think it's better than

[00:11:39] Speaker 03:
than denying this appeal.

[00:11:40] Speaker 03:
I think that's, but I think the correct remedy in this case that this panel as a matter of law can issue a decision for the defendant.

[00:11:49] Speaker 03:
Because again, I don't see why plaintiffs should have now all of a sudden a chance to bring up something that they had a chance in the first place.

[00:11:56] Speaker 02:
But they brought up that she had memory issues, was confused.

[00:12:00] Speaker 02:
There is a diagnosis in several instances of senile dementia.

[00:12:05] Speaker 02:
None of that matters.

[00:12:19] Speaker 03:
I will put it differently.

[00:12:20] Speaker 03:
I don't want to go too far and say if this was argued, if this was truly argued, I would have a much harder time arguing this issue.

[00:12:28] Speaker 03:
But again, the whole disposition of the case would have been different.

[00:12:33] Speaker 03:
There was a motion for summary judgment.

[00:12:34] Speaker 03:
There were so many issues.

[00:12:35] Speaker 03:
There's a reason, like due process is, there's a reason it is a constitutional right.

[00:12:43] Speaker 03:
It's a constitutional right.

[00:12:44] Speaker 03:
We cannot just glance over it and say, well, it's harmless.

[00:12:48] Speaker 03:
No big deal happened here.

[00:12:49] Speaker 03:
No, it is a very big deal.

[00:12:52] Speaker 03:
I don't know.

[00:12:53] Speaker 03:
As bankruptcy counsel, I mean, I'm sitting there, and I have to assess, when I present my client, what are the best chances?

[00:12:59] Speaker 03:
Who knows?

[00:13:00] Speaker 03:
Maybe it would have presented.

[00:13:01] Speaker 03:
Maybe I would have expected it and told my client, you know, this is a problem.

[00:13:05] Speaker 03:
Who knows?

[00:13:06] Speaker 03:
There are so many things.

[00:13:07] Speaker 03:
We could have dismissed the bankruptcy.

[00:13:08] Speaker 03:
I'm sorry.

[00:13:09] Speaker 03:
A lot of things could have happened.

[00:13:11] Speaker 03:
But we were not given the chance.

[00:13:13] Speaker 03:
And in fact, I don't see why plaintiffs now answering Judge Ganz's question should be allowed to go back now and argue it, not to mention it is the same sort of fact.

[00:13:25] Speaker 03:
And God help me.

[00:13:28] Speaker 04:
Because counsel, because you argued that it's a due process violation.

[00:13:33] Speaker 04:
You were not on notice that this issue would come up.

[00:13:36] Speaker 04:
The evidence came in.

[00:13:38] Speaker 04:
The question is, if you weren't aware of the theory, are we supposed to reverse the decision and enter judgment for your client or remand and say they didn't have the opportunity to address the legal issue?

[00:13:51] Speaker 04:
Give them the opportunity.

[00:13:54] Speaker 03:
Correct, but I don't see why this should be given the opportunity, but it doesn't change the finding of fact.

[00:13:59] Speaker 03:
Let's assume we go back.

[00:14:02] Speaker 03:
Again, I don't see why they should be allowed to argue something.

[00:14:05] Speaker 03:
This is different in saying, you know, you miss the court, you remand the usual case.

[00:14:10] Speaker 03:
the wrong legal standard.

[00:14:12] Speaker 03:
No, this is different.

[00:14:13] Speaker 03:
This is, you injected a legal standard that was never argued in the first place.

[00:14:18] Speaker 03:
It's very different.

[00:14:20] Speaker 03:
And that's why I say, as a matter of fact, as hard as it is, and we really need to, this is a difficult thing to try to ignore what's going on here and understand.

[00:14:27] Speaker 03:
It's almost a math equation.

[00:14:29] Speaker 03:
You take that out, the whole everything.

[00:14:31] Speaker 03:
But you say the finding of facts is the finding of facts.

[00:14:34] Speaker 03:
There is no reason for him to second what.

[00:14:36] Speaker 03:
Is Judge Frest going to change his finding of facts based on now presenting with a now that he said you cannot use that standard or not?

[00:14:45] Speaker 03:
I think, again, this is a procedural due process that is the core of this argument.

[00:14:51] Speaker 03:
And I'm seeing I have 20 seconds left, so.

[00:14:56] Speaker 00:
All right.

[00:14:56] Speaker 00:
Thank you very much.

[00:14:57] Speaker 03:
Thank you.

[00:15:16] Speaker 01:
Morning, Your Honors, and may it please the court.

[00:15:19] Speaker 01:
Turning to the due process issue that counsel just argued, due process is what takes place in a court when litigants are represented by counsel.

[00:15:29] Speaker 01:
Mrs. Sege got her due process.

[00:15:30] Speaker 01:
We had a four-day trial.

[00:15:32] Speaker 01:
She was represented by two able bankruptcy counsel.

[00:15:35] Speaker 01:
We've all presented the claims and arguments and defenses.

[00:15:39] Speaker 01:
All the evidence came in.

[00:15:40] Speaker 01:
There were no motions to eliminate.

[00:15:42] Speaker 01:
And she had her day in court.

[00:15:44] Speaker 01:
And I suggested to the court that that constitutes due process.

[00:15:49] Speaker 02:
that Judge Farris was required to find undue influence to make his ultimate conclusions about the Santa supporting the non-dischargeability claim?

[00:16:01] Speaker 01:
No, sir.

[00:16:02] Speaker 01:
The two cons before the court were, first, the surcharge against the trustee, which was pending in state court.

[00:16:10] Speaker 01:
And we brought that as an adversary money judgment action as a court proceeding in this courthouse.

[00:16:16] Speaker 01:
The second issue was, and the Bullock is not the model of assistance to guide trustees who face these situations and up in bankruptcy court.

[00:16:34] Speaker 01:
And nevertheless, that is the law.

[00:16:37] Speaker 01:
That's the law in this circuit.

[00:16:38] Speaker 01:
And so we presented a case.

[00:16:40] Speaker 01:
We actually sought summary judgment in this case.

[00:16:43] Speaker 01:
arguing that the breach of fiduciary duty was litigated in probate court.

[00:16:48] Speaker 01:
And I said to the court in the supplemental excerpt of record at 108 that the trustee did breach and violate her fiduciary duty.

[00:16:56] Speaker 01:
That was an unappealed finding in probate court.

[00:16:58] Speaker 01:
Second, the other probate court finding was that the trustee had misappropriated and misused trust funds.

[00:17:05] Speaker 01:
So that was the state of the law and the case in probate court, both of which findings were preclusive, or we argued should be preclusive in this court.

[00:17:15] Speaker 01:
In light of Bullock, Judge Farris said no.

[00:17:17] Speaker 01:
He granted the issue of preclusion for that Mississigi was the trustee and that it was expressed trust.

[00:17:26] Speaker 01:
But the issue as to her state of mind was plainly litigated.

[00:17:32] Speaker 01:
Mrs. Felipe's state of mind and mental decline was germane and factual to the extent that Mrs. Sege, the debtor, knew about it.

[00:17:41] Speaker 01:
And that's what the lens that Judge Farris's decision should be seen from.

[00:17:46] Speaker 01:
And he exhaustively went in page 18 through 20 of the findings of fact, all of the mental decline that started in 2014.

[00:17:55] Speaker 01:
In 2016, the house was sold.

[00:17:59] Speaker 01:
Later that year,

[00:18:03] Speaker 01:
lawsuit settlement, $275,000 went out to settle a lawsuit that was pending against Mrs. Segey, her husband, and her children.

[00:18:10] Speaker 01:
And so all those facts relating to the mental health of Mrs. Felipe, the settlore, was only germane and relevant to Judge Farris's findings that

[00:18:22] Speaker 01:
Mississippi knew exactly what she was doing.

[00:18:25] Speaker 01:
And she was the most intimately aware of what was going on with Mississippi's mental state.

[00:18:30] Speaker 01:
And so it was largely just to counter or rebut Mississippi's continued assertions that every transaction, every lawsuit settlement, the house construction project, the car, all those trust expenditures were

[00:18:45] Speaker 01:
not.

[00:18:46] Speaker 01:
And that explains why Judge Ferris didn't believe that they were the result of gifts or express direction.

[00:18:52] Speaker 01:
And so it's only through that lens, I think, as almost a belt and suspender saying that even I think what Judge Ferris is saying is even if she did say that you weren't entitled to listen to that because of Judge Ferris's findings,

[00:19:05] Speaker 01:
that her mental decline was so pronounced that no reasonable person could rely on those instructions.

[00:19:11] Speaker 01:
And it only is germane and relevant to what Mrs. Sege knew.

[00:19:16] Speaker 01:
I think it's clear that Judge Farris

[00:19:19] Speaker 01:
established in his very like the incogent decision that she knew what she was doing and it was intentional and this was not like Bullock where a non-professional trustee gets a load of cash all of a sudden you're ominous nominous the trustee oh I didn't know what to do with it and harm happened that is Bullock this is not Bullock

[00:19:40] Speaker 01:
This is two years, $900,000 being expended.

[00:19:44] Speaker 01:
This is commingling of trust funds and personal funds.

[00:19:48] Speaker 01:
This is massive subsidies of their husband and wife's business.

[00:19:54] Speaker 01:
This is a construction project that expanded their own personal house with nary a note putting the trust on title or any way to protect the trust beneficiaries from these actions.

[00:20:07] Speaker 02:
This all comes back down to counsel's point, which is, you know, much of this is very simple.

[00:20:13] Speaker 02:
You point that this was wrongful and benefited the debtor, she says it was authorized.

[00:20:20] Speaker 02:
And that gets us to the undue influence.

[00:20:23] Speaker 02:
So what is the relationship between your point is that she really couldn't authorize it, which it seems Judge Farris put under the label undue influence.

[00:20:33] Speaker 01:
So let me kind of unpack that a little.

[00:20:36] Speaker 01:
Judge Farris has an entire section of his decision that says mental state and her intent.

[00:20:40] Speaker 01:
And the words undue influence don't appear in that section.

[00:20:43] Speaker 01:
So that's where I first invite the court to look at as to his core findings.

[00:20:47] Speaker 02:
So, and that's the point I think I was trying to make, is that if the words undue influence are never used in Judge Farris's opinion, is it erroneous?

[00:21:01] Speaker 01:
I don't think, you're sitting in his courtroom so I don't want to say anything he did was erroneous, but I don't think he needed to say those words in order for us to win.

[00:21:12] Speaker 02:
And why is that?

[00:21:13] Speaker 01:
because at the core, the two claims that we were litigating were the amount of the surcharge in light of the public court findings, et cetera, and her science or vis-a-vis the transactions and her conduct and all the monies that were taken from the trust.

[00:21:31] Speaker 01:
Those were the two core issues.

[00:21:33] Speaker 01:
Undo influence is classically, if we had an undue influence claim in this case, we would be challenging the trust.

[00:21:40] Speaker 01:
And classically, the way undue influence claims get brought here are there is a challenge, trust, or will instrument which disinherits kids or favors one child.

[00:21:51] Speaker 01:
And so the civil claim is undue influence saying that instrument should not be valid because of the proving up in the Herbert factors, which

[00:22:02] Speaker 01:
are in the footnote of the decision.

[00:22:04] Speaker 01:
That's not our case.

[00:22:05] Speaker 01:
We didn't have to prove that at all.

[00:22:08] Speaker 01:
The probate court said, breach of fiduciary duties, misuse of trust funds, surcharge as appropriate, go have a trial as to the amount of the surcharge.

[00:22:17] Speaker 01:
We had that trial in this courtroom, and that was what all the evidence was.

[00:22:21] Speaker 01:
And the judge went through, and volumes of information was submitted to Judge Farris to prove up the amount of the surcharge, and he made a finding.

[00:22:32] Speaker 01:
That he included his undue influence, I think, is almost a storytelling, legal storytelling of his way to analyze what he heard in court.

[00:22:44] Speaker 01:
He had strong opinions about the testimony he heard, and he had comments in the decision about final dynamics and the like.

[00:22:52] Speaker 01:
None of that is germane to the actual request the plaintiff made in these proceedings, amount of surcharge, and to satisfy Bullock and assign her, that none of these transactions were taken by, you know, were made by negligence.

[00:23:05] Speaker 01:
Yes, sir.

[00:23:07] Speaker 04:
Just to clarify, so that it appears that what you're suggesting is that the problem or the issue for Judge Farris was

[00:23:22] Speaker 04:
whether Ms.

[00:23:24] Speaker 04:
Kasigi's explanation for her use of the funds was he didn't believe her, find her credible, and then he backed it up with even if you receive these instructions from the testator or the grant

[00:23:44] Speaker 04:
You shouldn't have relied on them because she wasn't capable, and you knew she wasn't capable.

[00:23:50] Speaker 04:
So I don't believe your explanation, number one.

[00:23:52] Speaker 04:
And number two, the evidence doesn't support the conclusions that you want me to reach.

[00:24:00] Speaker 04:
The medical records and other evidence suggest she was in common.

[00:24:04] Speaker 04:
Is that the summary of your argument?

[00:24:07] Speaker 04:
Yes, Your Honor.

[00:24:09] Speaker 04:
Just want to clarify.

[00:24:11] Speaker 01:
I'm sorry, Your Honor.

[00:24:12] Speaker 04:
I just want to make sure I understood it.

[00:24:16] Speaker 01:
And candidly, these types of cases, you know, undue influence and fiduciary duty are the vernacular of these types of cases.

[00:24:26] Speaker 01:
And so when I went to the transcripts, you know, I did see a reference to undue influence in the summary judgment hearing.

[00:24:32] Speaker 01:
that was brought up, not by me, but by debtor's counsel.

[00:24:36] Speaker 01:
And so we are talking about a post-death probate and trust dispute.

[00:24:42] Speaker 01:
And so these types of terms are part of the vernacular.

[00:24:44] Speaker 01:
And so it's not surprising that Judge Farris would include that.

[00:24:48] Speaker 01:
However, at its core, Judge Farris explicitly found as fact, and I don't think there's any showing that there's clear error that

[00:24:58] Speaker 01:
He didn't believe her.

[00:25:00] Speaker 01:
And she sat there and said, Mom told me I could do this.

[00:25:02] Speaker 01:
Mom told me I could do this.

[00:25:03] Speaker 01:
Mom told me I could do this.

[00:25:05] Speaker 01:
And Judge Farris didn't believe her.

[00:25:06] Speaker 01:
And that's in his decision.

[00:25:07] Speaker 01:
That he said on the, you know, even if what I think what the conclusion of the law can be fairly read to say is, even if what she said took place is true, I don't believe it.

[00:25:18] Speaker 01:
You know, there's just no way it was under my influence.

[00:25:20] Speaker 01:
She was a demented 90 plus year old woman.

[00:25:25] Speaker 01:
living at her house.

[00:25:26] Speaker 01:
The primary caregiver was Mississigi.

[00:25:29] Speaker 01:
And so I think it's fair to say that, and I think that Judge Farris' ruling should only be read to say that it's the contradicting the third and tertiary defense.

[00:25:41] Speaker 02:
I want to move you past that to the surcharge aspect, as you indicated, because when you read this, and Judge Farris struggled with this, I mean, it's pretty clear from the transcript, you know, he admits that

[00:25:54] Speaker 02:
There were some reasonable expenses there.

[00:25:56] Speaker 02:
There had to be.

[00:25:58] Speaker 02:
And there's a tension there because of the record, it is difficult to understand exactly what, and Judge Farris relied upon that.

[00:26:11] Speaker 02:
But how do you, first of all, what is the $15,000 credit from?

[00:26:16] Speaker 01:
Judge Ferris found that there were gifts made that were backed up with documents.

[00:26:22] Speaker 02:
Which ones?

[00:26:23] Speaker 02:
I mean, I could not find that in the record.

[00:26:28] Speaker 02:
Are you able to identify which?

[00:26:32] Speaker 02:
Is that a problem here?

[00:26:36] Speaker 02:
I mean, it goes to the appellants, the debtors' arguments that everybody recognizes that there were some expenses that were reasonable.

[00:26:48] Speaker 01:
I agree, your honor.

[00:26:49] Speaker 01:
However, trustee having trust funds, the burden is upon them to show

[00:26:57] Speaker 01:
with receipts, with whatever, to say, look, I've done a calculation.

[00:27:01] Speaker 01:
Here's an expert witness on what the fair market value of caregiving in the state of Hawaii is.

[00:27:06] Speaker 01:
All that is her burden to show.

[00:27:10] Speaker 01:
First off, let me take a step back.

[00:27:11] Speaker 01:
The calculation of damages is largely a trial court's function.

[00:27:16] Speaker 01:
And so there is, was evidence, and the Mississippi did testify about gifts that were made.

[00:27:24] Speaker 01:
And so there were a lot of,

[00:27:25] Speaker 01:
There were thousands of transactions.

[00:27:27] Speaker 01:
They were co-mangled funds.

[00:27:28] Speaker 01:
There is no way to know how much was social security money coming in.

[00:27:32] Speaker 02:
Well, I mean, Judge Farris, the solution was to basically put that aside, right?

[00:27:36] Speaker 02:
Because he basically looked at the funds coming from the sale of the house.

[00:27:39] Speaker 02:
Ultimately, that was his.

[00:27:41] Speaker 02:
He took that, and that was the basis.

[00:27:43] Speaker 02:
So the ones before and anything before the sale of the house really falls to the side.

[00:27:48] Speaker 02:
That is not what she is being surcharged.

[00:27:52] Speaker 01:
No, no.

[00:27:52] Speaker 01:
But I guess my point is that she was able to live on living expenses from Social Security, which I think was in the record $800 a month.

[00:28:00] Speaker 02:
Is it, though, because you review the bank records, and again, there's confusion as to which bank record was her, which account.

[00:28:08] Speaker 02:
But there's deposits made that are just unidentified deposits.

[00:28:13] Speaker 02:
And then if you go to the accounting, which I understand is a little bit iffy, based upon the weight that Judge Farris gave it, there are reimbursements, fairly contemporaneous with the receipt of the money, which seems to suggest that they could be read to be reimbursements for the expenses that the Susigis made.

[00:28:35] Speaker 02:
So how is that reconciled?

[00:28:38] Speaker 01:
Let's kind of take us out of the Bullock lens and let's just go into the classic probate court lens.

[00:28:44] Speaker 01:
If you are named trustee of your parents' trust, the prudent thing to do is to open up a bank account in the trust name, get an employee identification number, do the tax returns, treat those funds as not yours, such that if there's ever a challenge by one of your siblings saying, hey, you drive a new car, did you use mom and dad's trust funds for that?

[00:29:07] Speaker 01:
No, here is the bank statement, here is the accounting, here are the transactions, here are the monies in, here are the monies out,

[00:29:13] Speaker 01:
Here's the backup.

[00:29:14] Speaker 01:
And that is what the accounting that we sought in probate court and which the court ordered her to produce and was never done.

[00:29:22] Speaker 01:
And so I would posit to the court that what was given to Judge Farris was not an accounting.

[00:29:27] Speaker 01:
It was a data dump of financial records and transactions, leaving it up to Judge Farris to figure out, well, how much of it was her food?

[00:29:36] Speaker 01:
How much of it was her doctor copay, et cetera?

[00:29:41] Speaker 01:
I think it's fair to infer that since she lived on Social Security in her house before she moved in with Ms.

[00:29:49] Speaker 01:
Seegi, that that is the burn rate of which her living expenses, food expenses, doctor visits, parking, whatever gas is.

[00:29:57] Speaker 01:
And so I think that's why ultimately we didn't litigate and it wasn't really brought in.

[00:30:02] Speaker 01:
the impact of social security to cover those living expenses.

[00:30:06] Speaker 01:
And so that's why I think it's fair to infer that, first of all, the burn rate of her living food, et cetera, is social security.

[00:30:14] Speaker 01:
And so the bulk of the litigation was over the proceeds of that house.

[00:30:19] Speaker 01:
And the big transactions, the $275,000 fraud lawsuit, the $220,000 construction lawsuit,

[00:30:28] Speaker 01:
huge dollars going out the door.

[00:30:30] Speaker 01:
That, I don't know, you know, that was what the trial was about.

[00:30:35] Speaker 01:
And the trustee has never said, you know, oh, that might be iffy, whatever, but I at least get this dollar amount.

[00:30:43] Speaker 01:
She told the probate court and she told Judge Farris in the trial, and even in this court, she's entitled to everything.

[00:30:50] Speaker 01:
Mom said I could have it.

[00:30:52] Speaker 01:
I was the trustee.

[00:30:53] Speaker 01:
You know, here you go.

[00:30:54] Speaker 01:
Here's the volume.

[00:30:55] Speaker 01:
Here's 10,000 pieces of paper, Judge Ferris.

[00:30:57] Speaker 01:
Somewhere in this piece of paper is a reasonable claim for caregiving, food, gas, whatever, and left it up to Judge Ferris to do.

[00:31:06] Speaker 01:
He went through and he found $15,000 of gifts.

[00:31:10] Speaker 01:
There were

[00:31:11] Speaker 01:
There was gifts.

[00:31:12] Speaker 01:
Hard to say whether those were gifts from Mississippi for whatever reason, whether they're reimbursements for whatever.

[00:31:18] Speaker 01:
We just don't know.

[00:31:19] Speaker 01:
All we have are canceled checks.

[00:31:23] Speaker 00:
All right.

[00:31:23] Speaker 00:
Thank you.

[00:31:24] Speaker 00:
Thank you.

[00:31:24] Speaker 00:
Your time is up.

[00:31:25] Speaker 00:
So thank you for your argument.

[00:31:30] Speaker 00:
And this matter will be submitted.

[00:31:32] Speaker 00:
Oh, I got.

[00:31:34] Speaker 00:
We got 21 seconds.

[00:31:35] Speaker 00:
That's right.

[00:31:35] Speaker 00:
I'm sorry.

[00:31:37] Speaker 01:
Oh, deadline?

[00:31:38] Speaker 01:
No.

[00:31:39] Speaker 00:
No, no.

[00:31:39] Speaker 01:
That's OK.

[00:31:41] Speaker 00:
That's appellants.

[00:31:42] Speaker 00:
I forgot about it.

[00:31:43] Speaker 00:
I apologize for forgetting your 21 seconds.

[00:31:45] Speaker 00:
Please go ahead.

[00:31:47] Speaker 03:
Mr. Murakami called the judges first.

[00:31:49] Speaker 03:
The finding is a legal storytelling.

[00:31:52] Speaker 03:
It is not.

[00:31:53] Speaker 03:
It's a matter of due process.

[00:31:54] Speaker 03:
If you look at it, it doesn't matter what all the background noise is in the background and how big of these numbers are.

[00:31:59] Speaker 03:
It doesn't change the simple fact.

[00:32:01] Speaker 03:
He could not determine whether she acted on her own or with her mother's authorization.

[00:32:06] Speaker 03:
He cannot.

[00:32:06] Speaker 03:
That's the bottom line.

[00:32:08] Speaker 03:
He cannot figure out whether it was happened under A or B.

[00:32:11] Speaker 03:
And if you take out the undue influence, which was central to the decision, the decision in this case has to be, as a matter of law, a judgment for the defendant.

[00:32:21] Speaker 03:
Thank you very much.

[00:32:22] Speaker 00:
Thank you.

[00:32:22] Speaker 00:
All right, now this matter is submitted.