California Successor In Interest Affidavit Not A Prerequisite To Filing Suit

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In Aghaian v. Shahen Minassian, the California Appellate Court, Second District, affirmed a $34 million judgment and discussed the timing of filing successor in interest affidavits to pursue litigation as a successor in interest in California courts.  We have written about this case’s earlier appearance before the appellate court, here.

The Facts Of Aghaian v. Minassian

Plaintiffs’ father, Gagik Galstian, was a successful businessman in Iran for many years. During that time, he and Plaintiffs’ mother, Knarik Galstian, obtained significant real estate holdings. The Galstians fled Iran in 1978 during the unrest that led to the Iranian revolution.

In 1996, Gagik entered into a contract with Minassian— who was a family friend—to try to reclaim some of his properties in Iran. To effectuate the agreement, the Galstians executed powers of attorney granting Minassian authority to act on their behalf in reclaiming and selling the properties. Gagik and Knarik died in 2012.

Plaintiffs filed a complaint against Minassian in 2013, alleging that he conspired to steal their parents’ properties and defraud them out of millions of dollars.  Plaintiffs brought their claims individually and as trustees of their parents’ trust.  The case proceeded to a bench trial in 2017, after which the court issued a 61-page statement of decision finding in Plaintiffs’ favor.

The court summarized its conclusions as follows:

“[B]y at least 2006, with a few isolated exceptions, it appears that Minassian began what was essentially an effort to acquire all of the Galstian properties for himself and, in the instance of any sale, to keep all, or some, of the money received for himself. In order to accomplish this, he failed to advise the Galstians that he had utilized the power of attorney he had been given by Galstian to transfer title to nearly all of the real estate assets to himself, failed to truthfully advise them of the status of the properties and failed to account for sales from which he kept some or all of the proceeds for himself. He has engaged in numerous transactions which he has not described or explained even up to the present time, often stating that he does not remember. He also has had evidentiary sanctions imposed because of his failure to produce documents and the net result of the purported lack of memory and the failure to produce records substantially impacted the court’s, and the Plaintiffs’, ability to reconstruct the events. Whatever his intentions were when he and Galstian made their agreement, he has deliberately and systematically taken Plaintiffs’ property, and many proceeds therefrom, for himself on numerous occasions.”

The court entered judgment in Plaintiffs’ favor for $34,506,989 plus interest. Minassian appealed.

Minassian raised many issues on appeal.  One of the issues was whether the Plaintiffs lacked standing because their section 377.32 declarations were in error, and that Plaintiffs’ claims were barred because the statute of limitations had run before the Plaintiffs obtained standing.

What Is a Section 377.32 Successor In Interest Declaration?

Generally, “a cause of action for or against a person is not lost by reason of the person’s death, but survives subject to the applicable limitations period.” Section 377.20, California Code of Civil Procedure.

Under section 377.30, a “cause of action that survives the death of the person entitled to commence an action or proceeding passes to the decedent’s successor in interest, . . . and an action may be commenced by the decedent’s personal representative or, if none, by the decedent’s successor in interest.”

Section 377.32 of the California Code of Civil Procedure, in turn, requires a “person who seeks to commence an action or proceeding or to continue a pending action or proceeding as the decedent’s successor in interest” file a declaration stating, among other things, (1) “ ‘no proceeding is now pending in California for administration of the decedent’s estate,’ ” (2) the declarant is the decedent’s successor in interest, and (3) “[n]o other person has a superior right to commence the action or proceeding or to be substituted for the decedent in the pending action or proceeding.” (§ 377.32, subd. (a).)

Is a Section 377.32 Successor In Interest Declaration a Prerequisite For Filing Or Continuing an Action In California Courts?

No, filing a section 377.32 successor in interest declaration is not a prerequisite for filing or continuing an action in California.

Here, Minassian contended on appeal that Plaintiffs’ claims were barred by the statute of limitations.  The court reviewed the timeline:

Plaintiffs filed their original complaint on January 7, 2013, and their first amended complaint (FAC) less than a month later. In September 2013, Plaintiffs filed declarations under section 377.32, in which they asserted, among other things: (1) no proceeding is pending for the administration of their parents’ estates; (2) they are their parents’ successors in interest with respect to the pending action; and (3) no other person has a superior right to commence the action. While the first appeal in this case was pending, a probate estate was opened for Gagik. On June 19, 2015—about a week after the remittitur was issued—Plaintiffs filed new section 377.32 declarations, which referenced the probate estate. Plaintiffs filed a second amended complaint (SAC) in September 2015. Minassian demurred, arguing Plaintiffs lacked standing because their section 377.32 declarations were incomplete or contained errors. He further argued Plaintiffs’ claims were barred because the statute of limitations had run before they obtained standing. The trial court disagreed, relying on Parsons v. Tickner (1995) 3l Cal.App.4th 1513 for the proposition that a section 377.32 declaration is not a prerequisite to filing or continuing an action.

Minassian did not dispute that Plaintiffs filed their original complaint within the applicable statute of limitations. Nonetheless, he insisted Plaintiffs lacked authority to pursue their claims until they filed their second set of section 377.32 declarations in June 2015.  As a result, he argued, the original complaint and first amended complaint are nullities, and the first valid complaint was the second amended complaint, which was filed after the statute of limitations had run. The California appellate court disagreed, because section 377.32 does not require that the affidavit be filed as a condition precedent to commencing or continuing the action:

Here, Plaintiffs asserted causes of action as their parents’ successors in interest, yet they filed their section 377.32 declarations well after commencing the action. Section 377.32, however, “does not require that the affidavit be filed as a condition precedent to commencing or continuing the action.” (Parsons v. Tickner, supra, 31 Cal.App.4th at p. 1523.) Instead, at most, “failure to file the affidavit could possibly subject the action to a plea in abatement.” (Id. at pp. 1523–1524.) That Plaintiffs failed to immediately file their section 377.32 declarations, therefore, does not render the original complaint and [first amended complaint] nullities.

The opinion also contains interesting discussion of improper forum, discovery sanctions, and the award of equitable relief and illegal contracts, which are worth a read.

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