EDWARD D. JELLEN, U.S. Bankruptcy Judge.
By this adversary proceeding, plaintiff Willie J. Lewis ("Lewis") seeks a nondischargeable judgment and other relief against debtor Rollie J. Paul ("Paul") pursuant to Bankruptcy Code §§ 523(a)(2),(4), and (6) . The court will enter judgment against Paul in the sum of $45,000 plus interest pursuant to Bankruptcy Code § 523(a)(6), impose a constructive trust on a certain vehicle hereinafter described, award Lewis his attorneys' fees for the present action pursuant to certain provisions of the California Welfare and Institutions Code hereinafter discussed, and deny the remaining relief requested.
At trial, Lewis's counsel advised the court that Lewis was not going to assert any nondischargeability claims against debtor Bertha Paul.
Bankruptcy Code § 523(a)(6) provides:
A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt —
. . .
(6) for willful and malicious injury by the debtor to another entity or to the property of another entity;
A. Background
On August 4, 1996, Curry Lewis ("Curry"), then aged 86 and now deceased, fell down in his home, and was unable to obtain help for several days. On August 7, Paul came to Curry's rescue and transported him to the hospital.
Curry was in the habit of keeping large sums of cash at his house. Before Paul and Curry left for the hospital, Curry transferred some cash to Paul. While in the hospital, Curry instructed Paul to enter his home and retrieve some firearms and some additional cash. Paul did so, ultimately obtaining possession of the sum of $49,000 in cash. Paul contends that Curry gave him the money as a gift. Lewis claims that Curry entrusted the money to Paul for safekeeping, and not as a gift, and that Paul subsequently spent all but $4,000, which he repaid.
Lewis is Curry's nephew, and residual legatee under Curry's Will. The Inventory and Appraisement for Curry's estate listed a $45,000 receivable owing from Paul in respect of the cash transfer mentioned above, ownership of which is now vested in Lewis through passage under Curry's Will. Lewis therefore brings this action in his capacity as Curry's successor.
B. Conversion
The weight of the evidence supports Lewis's allegation that Paul converted the sum of $45,000. The court bases this conclusion on the following:
1. After he received Curry's cash, Paul did not immediately deposit it in a bank account, the place where most people would, presumably, place the proceeds of a large cash gift. Rather, Paul placed it in the safe he kept at his home. Approximately one week later, on August 14, 1996, Paul used $23,359.87 of the cash to fund a payoff on his car loan, but apparently kept the balance in the safe until he eventually spent it (or as to $1,000, returned it; see the next paragraph).
2. On October 21, 1996, Leona Williams, representing Curry's family, demanded in writing that Paul return the funds. A family meeting followed soon thereafter (which Curry did not attend). At the meeting, Paul agreed to repay the money to Curry in monthly installments of $500. Subsequently he surrendered two $500 bills that he had received from Curry. Paul testified that he so agreed merely to keep the family peace. All factors taken into account, it appears to the court more likely that Paul did so in acknowledgment that the money was not his to keep.
3. On December 17, 1996, Curry filed a complaint against Paul in the California Superior Court alleging that he had embezzled the funds. (Curry died on February 23, 1997, while the action was pending.) Although Paul argues that Curry filed suit because he changed his mind about the gift, the weight of the evidence supports Lewis's contention that Curry did not intend to make a gift.
4. Curry took comfort in having possession of large amounts of cash in his home. Yet no convincing reason presents itself why he would suddenly decide to divest himself of that cash. Paul argues that it was gratitude. More likely than not, Curry entrusted the money to Paul for safekeeping while he was in the hospital.
5. Although Curry enjoyed a close personal relationship with both Paul and Lewis, Curry had no blood relationship with Paul. (Curry did have a close, romantic, relationship with Paul's sister.) Curry was survived by a number of blood relatives, including Lewis (his nephew), at least four nieces, and several grand nieces and nephews, all of whom received gifts under Curry's Will, but nothing nearly as large as the $48,000 in cash that Paul claims Curry gifted him. (Curry left Lewis's wife Mildred $20,000, and left Paul's sister and his surviving nieces gifts of $10,000 each.)
The court holds that Paul converted the sum of $45,000 and that this amount, plus interest at the rate of 10% per annum from November 27, 1996 is nondischargeable under Bankruptcy Code § 523(a)(6).
See California Civil Code §§ 3287(a) and 3289 (West 1997), providing for the payment of interest at the rate of 10% per annum on damage awards of a sum certain, commencing on the day the right to recover is vested. Here, the court believes the logical date for interest to commence accruing would be November 27, 1996, which is the date by which Curry's attorney, William Gibbs, demanded that Paul return the funds. See Exhibit 4.
C. Constructive Trust
It is undisputed that Paul used $23,359.87 of Curry's cash to fund a payoff on a loan secured by a 1992 Cadillac El Dorado. According to Paul's bankruptcy schedules, the vehicle is one with high mileage, and had a fair market value as of the date of the petition of approximately $8,094.
California Civil Code § 2224 (West Supp. 1989) provides:
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.
The court holds that under this provision, Lewis is entitled to impose a constructive trust on the vehicle because Paul had no right to use Curry's money to pay off the car loan.
D. Pain and Suffering; Fees and Costs 1. California Statutes
Lewis contends that he succeeds to Curry's claims against Paul for pain and suffering, costs, and attorneys' fees, and that he is entitled to additional damages in respect thereof pursuant to California's elder abuse statutes. One potential issue, which the parties did not brief, is the effect of the California Legislature amending several of the applicable provisions of the California Welfare and Institutions Code after 1996, when the acts complained of occurred. The court will note the differences, when relevant, but for the reasons hereafter stated, does not believe that the result herein turns on which version of the statute governs.
Generally, California statutes operate only prospectively. Cal. Civ. Code § 3; Evalgelatos v. Superior Court, 44 Cal.3d 1188, 246 Cal.Rptr. 629, 640 — 42 (1988). In ARA Living Centers-Pacific, 18 Cal.App.4th 1556, 23 Cal.Rptr.2d 224 (1993), the court was called upon to determine whether certain amendments to California Welfare and Institutions Code § 15657, enacted in 1991, operated retroactively. In doing so, the court distinguished between statutes that "merely effected a change in the conduct of trials", where a statute may be retroactive, and those that "changed the legal consequences of past conduct by imposing new or different liabilities based upon such conduct", where retroactivity would be improper. Here, the court need not decide which category the post-1996 amendments fall into.
Cal. Welfare and Inst. Code (hereinafter, "Welfare") § 15657 (West Supp. 2000), as now in effect, provides, in relevant part:
Where it is proven by clear and convincing evidence that a defendant is liable for physical abuse as defined in Section 15610.63, neglect as defined in Section 15610.57, or fiduciary abuse as defined in Section 15610.30, and that the defendant has been guilty of recklessness, oppression, fraud, or malice in the commission of this abuse, in addition to all other remedies otherwise provided by law:
(a) The court shall award to the plaintiff reasonable attorney's fees and costs. The term "costs" includes, but is not limited to, reasonable fees for the services of a conservator, if any, devoted to the litigation of a claim brought under this article.
(b) The limitations imposed by Section 337.34 [sic: the reference should be to Section 377.34] of the Code of Civil Procedure on the damages recoverable shall not apply. However, the damages recovered shall not exceed the damages permitted to be recovered pursuant to subdivision (b) of Section 3333.2 of the Civil Code.
This provision is almost the same as the provision that was in effect in 1996, the only difference being the statutory cross-references. See Welfare § 15657, West, Westlaw, through 1997 legislation.
Thus, as a matter of California law, a decedent's successor is not prohibited from recovering on the decedent's claim for pain and suffering, and attorneys' fees and costs, if the successor establishes by clear and convincing evidence that the defendant committed physical abuse, neglect, or fiduciary abuse, as defined in the statute. See ARA Living Centers-Pacific, Inc. v. Superior Court, 18 Cal.App.4th 1556, 23 Cal.Rptr.2d 224 (1993).
Here, there is no claim of physical abuse or neglect as defined in Welfare §§ 15610.63 and 15610.57. Interestingly, Welfare § 15610.30 (West Supp. 2000), as now in effect, referenced in Welfare § 15657, does not include any definition of "fiduciary abuse". Rather, it defines the term "financial abuse". The court, however, will construe "fiduciary abuse" in Welfare § 15657 to be synonymous with "financial abuse" in Welfare § 15610.30. Otherwise the reference in Welfare § 15657 to "fiduciary abuse as defined in Section 15610.30" would make no sense.
Welfare § 15610.30(a)(1) provides:
(a) "Financial abuse" means a situation in which one or both of the following apply:
(1) A person, including, but not limited to, one who has the care or custody of, or who stands in a position of trust to, an elder or a dependent adult, takes, secretes, or appropriates their money or property, to any wrongful use, or with the intent to defraud.
Thus, the definition of "financial abuse" is extremely broad, and includes any misappropriation of money or property when the victim is age 65 or older, and thus, is an "elder" under Welfare § 15610.27 (West Supp. 2000). Under this definition, Paul committed "financial abuse" because he misappropriated Curry's money.
Welfare § 15610.30, as it read in 1996, the date on which Paul converted the funds, provided:
In 1997, the California Legislature amended Welfare § 15610.30 (West, Westlaw through 1997 legislation) to read substantially as it does now, except that it used the term "fiduciary abuse" rather than "financial abuse". In 1998, the Legislature amended § 15610.30 (West, Westlaw through 1998 legislation) again, this time to replace "fiduciary abuse" with "financial abuse", but no corresponding change was made to Welfare § 15617.
"Fiduciary Abuse" means a situation in which any person who has the care and custody of, or who stands in a position of trust to, an elder or a dependent adult, takes, secretes, or appropriates their money or property to any use or purposes not in the due and lawful execution of his or her trust.
Under this definition, Paul would have committed "fiduciary abuse" because he stood in a position of trust to Curry after Curry entrusted him with his cash for safekeeping. Thus, under both the 1996 and current versions of Welfare § 15610.30, Paul would have a potential liability for "fiduciary abuse".
In addition, Paul testified that he had taken on a substantial portion of the responsibility of caring for Curry after his accident.
2. Attorneys' Fees
Generally, parties to litigation under Bankruptcy Code § 523(a) bear their own attorneys' fees when the issue is dischargeability. In re Fobian, 951 F.2d 1149 (9th Cir. 1991). An exception exists, however, when dischargeability litigation includes state law issues, and when attorneys' fees for litigating those issues are allowable under state law. In re Baroff, 105 F.3d 439, 441 (9th Cir. 1997). See also Cohen v. de la Cruz, 523 U.S. 213, 219 (1998) (broadly construing nondischargeable "debt" in Bankruptcy Code § 523(a) to include attorneys' fees and treble damages that are awardable under applicable state law.)
Here, Lewis incurred substantially all of his attorneys' fees and costs in this action to establish the fact and amount of Paul's liability under California law. It follows that he should be allowed his attorneys' fees and costs herein pursuant to Welfare § 15657. ARA Living Centers-Pacific, 23 Cal.Rptr.2d at 226.
3. Pain and Suffering
Cal. Civ. Proc. § 377.34 (West Supp. 2000) provides:
In an action or proceeding by a decedent's personal representative or successor in interest on the decedent's cause of action, the damages recoverable are limited to the loss or damage that the decedent sustained or incurred before death, including any penalties or punitive or exemplary damages that the decedent would have been entitled to recover had the decedent lived, and do not include damages for pain, suffering, or disfigurement.
Thus, a decedent's successor cannot normally recover damages for the decedent's pain and suffering. Pursuant to Welfare § 15657, however, this limitation does not apply when the decedent's successor establishes "fiduciary abuse". Lewis therefore succeeded to any rights that Curry may have had to recover damages for pain and suffering.
Lewis bases his claim for pain and suffering damages on the testimony of several witnesses who stated that Curry was extremely distraught after he failed to recover his cash from Paul. Notwithstanding this testimony, the court declines to award Lewis damages for pain and suffering. For a plaintiff to recover, the pain and suffering must be severe, and not trivial or transitory. See, e.g., Pintor v. Ong, 211 Cal.App.3d 837, 259 Cal.Rptr. 577 (1989). Here, it is not clear how substantial Curry's distress was, and to what extent that distress resulted from the accident or the decline in Curry's general health. Moreover, though not conclusive, the court also notes that Curry's complaint against Paul did not include a cause of action for pain and suffering. See Exhibit R. It was only after Curry died and Lewis filed a complaint against Paul that damages against Paul for Curry's pain and suffering were requested.
E. Punitive Damages
Lewis contends that he is entitled to an award of punitive damages, as Curry's successor. See Cal. Civ Proc. Code § 377.34. Under California law, the court may impose punitive damages in cases where the defendant has been guilty of "oppression, fraud, or malice." Cal. Civ. Code § 3294(a) (West 1997). Imposition of damages under this provision is discretionary with the trier of fact. See, e.g., Beeman v. Burling, 216 Cal.App.3d 1586, 265 Cal.Rptr. 719, 726 (1990); Pickwick Stages v. Board of Trustees, 54 Cal.App. 739 (1921).
According to the California Supreme Court, the purpose of punitive damages is the "purely public one" of punishing wrongdoing to protect the public "from future misconduct, either by the same defendant or other potential wrongdoers." Adams v. Murikami, 54 Cal.3d 105, 109 (1991) (emphasis in original).
To ascertain whether the public interest is served by an award of punitive damages, the court must consider the nature of the wrongdoing, the amount of compensatory damages awarded, and the defendant's ability to pay the award. Adams, 54 Cal. 3d at 110-111; Neal v. Farmers Ins. Exchange, 21 Cal.3d 925, 928-29 (1978).
Here, the court does not believe that additional punishment beyond rendering Paul's debt nondischargeable "will substantially serve the societal interest". Adams, 54 Cal.3d at 110. Paul has just gone through bankruptcy, and by definition, is left with very little in the way of assets beyond his exempt property. By virtue of this Decision, he will be saddled with a large nondischargeable debt. Paul agreed to make restitution before any litigation was commenced. Under these circumstances, the court declines to award punitive damages.
According to Lewis's Trial Brief herein, Curry filed the suit against Paul because he was "dissatisfied with this rate of payment", i.e., payment at the rate of $500 per month.
F. Conclusion
Lewis is entitled to a judgment against Paul in accordance with this Decision. The court requests Lewis to submit a proposed judgment, which may include costs, within 15 days.