Hudson v. Foster

Filed 9/7/21
CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FIVE

NIGEL HUDSON, B300017

Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. SP008763)
v.

LUCAS FOSTER,

Defendant and Respondent.

APPEAL from an order of the Superior Court of Los
Angeles County, Brenda Penny, Judge. Reversed and remanded,
with directions.
Law Offices of Martin L. Horwitz and Martin L. Horwitz;
Klapach & Klapach and Joseph S. Klapach for Petitioner and
Appellant.
Garrett & Tully, Ryan C. Squire, Adjoa M. Anim-Appriah
for Respondent.
_______________________________
 A conservatee filed a motion asking the probate court to
exercise its inherent equitable authority to set aside an order
approving his former conservator’s final account due to
misrepresentations of material fact in the account. The probate
court denied the motion after finding that the conservatee failed
to show he was unaware of the defects in the account at the time
it was approved, or failed to act with reasonable diligence to set
aside the order in light of information that he should have
known. On appeal, the conservatee contends the order denying
the motion to vacate is appealable, because it is based on the
probate court’s equitable power to set aside an order obtained
through extrinsic fraud. The conservatee further contends that
the order approving the account was not preclusive under
Probate Code section 2103,1 because it was based on
misrepresentations of material fact, and as a result, the trial
court abused its discretion by refusing to set aside the order.
We agree that the order denying the motion to vacate for
extrinsic fraud is appealable in this case. Misrepresentations of
material fact in a conservator’s account are treated as extrinsic
fraud. We hold that a conservatee has no duty to investigate
representations of fact in the conservator’s account, unless the
conservatee becomes aware of facts from which a reasonably
prudent person would suspect wrongdoing. Therefore, to set
aside an order approving the conservator’s account on the ground
of extrinsic fraud, a conservatee is not required to establish that
the misrepresentations of material fact in the account could not
have been discovered prior to entry of the order approving the

1All further statutory references are to the Probate Code
unless otherwise specified.

2
account. The probate court’s ruling relied on legal authority that
we find unpersuasive because it placed a higher burden to
investigate on the conservatee. The matter must be reversed and
remanded for the probate court to exercise its discretion based on
an accurate understanding of the applicable law.

FACTUAL AND PROCEDURAL BACKGROUND

Conservatorship of the Estate

In January 2007, petitioner and appellant Nigel Hudson
was severely injured in a car accident. An attorney was
appointed guardian ad litem for Hudson. A personal injury
lawsuit filed on Hudson’s behalf resulted in a settlement of
$13,863,000. In October 2011, the court in the personal injury
case established a qualified settlement fund to receive the
settlement proceeds.
The guardian ad litem filed a petition for a voluntary
conservatorship of the estate on Hudson’s behalf, resulting in the
appointment of Hudson’s friend, respondent Lucas Foster, as the
general conservator of Hudson’s estate on April 6, 2012.2 Foster
is a film producer; he owns Warp Films, Warp Media
Development, Inc., Warp LLC, and various single purpose
entities. Hudson retained testamentary capacity and the ability

2 On February 13, 2012, Hudson filed a petition for
dissolution of his marriage to Cynthia Kendall. A final judgment
was entered in the dissolution proceedings on April 3, 2013.
Kendall, who was unrepresented, waived spousal support and
any interest in the proceeds of the civil action. She received
payment of $10,000 pursuant to the dissolution decree.

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to make medical decisions, so he did not require a conservator of
the person. Hudson and Foster agreed that Foster would
advance the funds necessary to pay for goods and services for
Hudson’s benefit, and Foster would be reimbursed after the
settlement proceeds were received. Hudson was able to view the
records of the conservatorship bank account that were online.
In January 2013, the court in the personal injury case
issued an order approving the disposition of the settlement
proceeds. $5,090,974.25 was paid directly to the guardian ad
litem for attorney fees, and $799,563.96 was paid directly to
certain medical providers. In addition, the civil court order
directed Foster to pay a total of $1,945,412.43 to creditors listed
in attachments to the order. The attachments listed hundreds of
creditors, including Miracle Mile and LA Litigation Copy Service.
The attachments showed Miracle Mile’s total bill was $11,250
and the negotiated balance was $10,125. The attachments listed
the total amount owing to LA Litigation as $39,913.25.

Order Approving Final Account

On December 28, 2013, Foster filed a first and final account
in the probate case and a petition for approval of the account,
allowance of attorney fees and costs, an order terminating
conservatorship of the estate, and discharge of the conservator.
Foster stated that he received property as conservator totaling
$9,489,265.16, and disbursed $4,314,887.38. The disbursement
schedule attached to the final account listed more than one
thousand disbursements made to various entities during the
accounting period from March 2, 2012, through October 31, 2013.

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The property on hand at the close of the final account was
$5,168,725.63, including cash of $2,730,932.03.
In the petition, Foster carefully explained that 17 checks
were paid to him directly or to his film production company which
were reimbursements for funds that he advanced to Hudson prior
to receipt of the settlement funds. Each amount that Foster
described in the petition as a reimbursement corresponded to an
entry on the disbursement schedule. The disbursement schedule
listed the payee for these transactions as Foster, Warp Film, Inc.,
or Warp Development, Inc., with a notation that the payment
was a reimbursement for a specific expense. In addition to the 17
entries that Foster expressly brought to the court’s attention in
the petition, there were a few additional entries in the
disbursement schedule listing amounts paid directly to Foster or
one of his companies and stating the payments were in
reimbursement for a specific expenditure made on Hudson’s
behalf. Foster waived payment of any conservator’s commissions.
Foster also explained in the petition that the civil court
order had directed him to pay specific creditors of the lawsuit. In
some circumstances, a creditor accepted a reduced payment.
Foster obtained receipts for all of the direct payments made to
creditors. Debts totaling approximately $300,000 remained
outstanding, however, because Foster was either unable to
contact the creditor or the creditor had been unwilling to execute
a receipt. Foster added, “[The remaining debts] will be fully set
forth in a noticed supplement hereto. [¶] Conservator submits
that these remaining debts simply be transferred to the
Conservatee, who will be taking over the process privately.”
Among hundreds of individual disbursements listed in the
account was a payment on July 9, 2013, to “Miracle Mile Surgical

5
Center – per Court Order” in the amount of $10,000, paid with
check number 2294. In addition, Foster made a payment on
April 2, 2013, to “LA Litigation Copy Service – litigation
expenses” in the amount of $31,089.25 with check number 2258.
Foster made a payment on November 28, 2012, to “Dr. Sam
Markzar, DDS – dental” in the amount of $9,839.10 with check
number 2227.
Foster did not disclose in the petition that 28 checks shown
as paid to third parties, including the checks to Miracle Mile, LA
Litigation, and Markzar, were in fact paid to Foster or one of his
companies. Miracle Mile and Markzar had not received any
payment toward Hudson’s debt. In other words, the checks listed
as paid to Miracle Mile and Markzar were not paid to them, and
the amounts received by Foster through these checks were not
reimbursement for funds advanced to these creditors. LA
Litigation received a payment from Foster toward Hudson’s debt,
but the amount was far less than was listed in the final account.
The check numbers and payment amounts listed in the final
account matched the information shown in the bank statements
for the conservatorship, but the bank statements did not contain
the names of the payees on the checks. Only the face of the
checks revealed the payee information. The total amount of the
28 checks disbursed to Foster’s own accounts, rather than to the
payees listed in the final account, was $558,169.47.
Hudson and the guardian ad litem each signed a consent to
the final account. On March 28, 2014, the probate court entered
an order approving the final account.

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Events after Approval of the Final Account

A week after the final account was approved, on April 4,
2014, a representative from Miracle Mile emailed an associate of
Foster asking about the status of payment for the services that
Miracle Mile provided to Hudson on two dates. Miracle Mile sent
a second email on April 7, 2014, explaining that the company
agreed in June 2011, to accept an offer of $10,125. The associate
forwarded the messages to Foster with a note saying the amount
needed to be paid and asking Foster to send a release to Miracle
Mile. Foster forwarded the messages to Hudson with a note that
said, “Let’s discuss.”
In a declaration filed later, Hudson described meeting with
Foster at a coffee shop to discuss the messages from Miracle Mile.
Calm and reassuring, Foster confirmed that Miracle Mile’s bill
was part of the outstanding $300,000 in medical expenses that
Foster had been unable to negotiate and remained unpaid.
Foster said he would have Miracle Mile sign a release and then
the bill would be paid. Hudson never saw a release from Miracle
Mile, and Foster never provided a supplement to the final
account listing the bills that remained unpaid under the court
order.
On October 18, 2014, more than 18 months after the
payment date stated in the final account and six months after
approval of the final account, LA Litigation signed a document
which was provided to Foster, acknowledging receipt of $23,500
in release of all claims against Hudson.
Foster told Hudson that he could settle Hudson’s
outstanding bill with UCLA for $60,000, so Hudson provided
$60,000 to pay the bill. Hudson later learned that Foster

7
negotiated a final payment of $54,500 in full satisfaction of
UCLA’s lien, but did not return the overpayment of $5,500 to
Hudson.
On April 26, 2017, Hudson filed an unrelated civil action
against Foster based on loans that Hudson made to Foster after
the conservatorship ended. According to the complaint, the total
amount borrowed was $400,000. Foster refused to sign a
promissory note secured by a deed of trust. Hudson filed the civil
action to compel Foster to repay the money borrowed after the
conservatorship terminated, and to recover the difference
between the amount that he gave Foster for payment of the
UCLA bill and the amount received by UCLA.
In April 2018, Miracle Mile filed a motion in the personal
injury case to enforce the settlement agreement. The motion was
brought against Foster in his former role as conservator. Miracle
Mile alleged that it had sent two letters to Foster without
response. Miracle Mile had not received payment of its bill for
$11,250 or any other sum required under the court ordered
settlement.

Motion to Vacate Order Approving Final Account

On August 30, 2018, Hudson filed a motion in the probate
court to vacate the order approving the conservator’s final
account on the grounds of fraud and misrepresentation of
material fact. Hudson stated that he was not aware of any fraud
until Miracle Mile filed its motion seeking to enforce the
settlement. After Miracle Mile insisted that it had not received
any payment under the court order, Hudson ordered copies of his
bank documents, including check images. Hudson saw that

8
check number 2294, which Foster’s final account listed as paid to
Miracle Mile, was in fact made payable to Warp Media
Development, Inc. Hudson compared the check images that he
received to the final account and discovered the 28 checks listed
in the final account as paid to third parties that were actually
made payable to Foster or one of his companies. In addition,
Hudson discovered Foster had written four checks totaling more
than $60,000 to himself or his company after the final account
had been approved, which were not listed in the account. Hudson
argued these discrepancies were misrepresentations of material
fact that provided grounds to vacate the order approving the final
account. Under section 2103, the conservator is not released
from claims of the conservatee if the order is obtained by fraud or
misrepresentation in the petition, account, or order as to any
material fact.
In support of the motion, Hudson submitted his attorney’s
declaration describing discovery of the misrepresentations in the
final account, the pleading filed by Miracle Mile in the civil
action, the disbursement schedule from Foster’s final account,
and copies of bank statements and check images showing that
the payees in the check images were not the parties listed in the
final account.

Opposition to Motion to Vacate

On October 11, 2018, Foster filed an opposition to the
motion to vacate the order approving the final account. He
explained that the parties had agreed Foster would advance
funds for Hudson’s benefit and be reimbursed for these sums
upon payment of the settlement proceeds from the personal

9
injury case. At all times, Hudson had online access to the
conservatorship bank account and was aware of all financial
transactions undertaken by Foster.
Foster’s counsel arranged for Nan Buchanan to prepare the
conservator’s account. All of the documents relating to the
conservatorship income and expenses, receipts and
disbursements, were provided to Buchanan. Buchanan prepared
the schedules for the final conservatorship account. The
schedules reflected direct payments to medical providers, as well
as payments for goods or services that were advanced by Foster
and reimbursed to him. The report disclosed and explained the
advances made for Hudson’s benefit. Hudson discussed the final
account with his guardian ad litem, and each consented to the
account in writing. The account was also reviewed by the probate
court investigator.
When the conservatorship terminated in 2014, Hudson was
aware of the dispute over payment of Miracle Mile’s bill. After
preparation of the final account, copies of every document related
to the account, including cancelled checks, invoices, bills,
statements, and other memorandum, were delivered in multiple
storage boxes to Hudson, who had ample time to review the
documents and object to the account or set aside the order
approving the account within the statutory time period.
Foster argued that no fraud had been shown. He admitted
it was arguable that the account represented direct payment was
made to a medical provider when the check was, in fact, a
reimbursement to Foster. He explained, “The fact that the
schedule of disbursements prepared by Nan Buchanan reflected
the underlying payees who provided services rather than
reflecting that Warp paid the provider and was reimbursed is

10
perhaps unclear, but is certainly not a fraud.” Hudson had not
alleged, and could not show, that the expenditures reflected in
the account were not advanced for his benefit. Although the
representations “might have been better presented in a separate
schedule reflecting both the underlying provider and the
reimbursement to Foster, they are not fraudulent, nor are they
untrue. There is no evidence suggesting the account is
substantively inaccurate.” He noted that no medical provider
disputed payment other than Miracle Mile, and there was no
damage to Hudson because all his bills had been paid.
In addition, Foster argued the motion was untimely.
Foster relied on the legal authority of Knox v. Dean (2012) 205
Cal.App.4th 417 (Knox), to argue that a party seeking to set aside
a judgment based on misrepresentations of fact must show the
facts could not reasonably have been discovered prior to the entry
of judgment. He also noted that Hudson had not submitted his
own declaration in support of the motion. Hudson was aware of
every transaction reflected in the account and Hudson had not
shown that he could not reasonably have discovered the allegedly
false information prior to entry of judgment.
Foster submitted his own declaration in support of the
opposition. He had advanced hundreds of thousands of dollars to
purchase goods and services for Hudson’s benefit, which were
reimbursed with payments from the conservatorship bank
account. He discussed each of the payments and reimbursements
with Hudson as they occurred. Hudson had no objections and
was grateful that Foster could facilitate the purchases. Hudson
was at all times aware of, and agreed to the advances and the
reimbursements. Foster did not request or receive any
compensation for the time and effort he expended as Hudson’s

11
conservator. All of the funds that were reimbursed directly to
Foster or any entity for which he is the principal were
reimbursements for money advanced for Hudson’s use and
benefit. Buchanan was provided all the banking records,
invoices, and other documents related to the conservatorship
account, and Buchanan prepared the various accounting
schedules attached to the final account.
When Foster received Miracle Mile’s email seeking
payment after the court approved the final account and
terminated the conservatorship, he forwarded the messages to
Hudson with an offer to discuss the bill. He was not sure why
Miracle Mile had not been paid long ago, or why Miracle Mile
waited so long to take legal action, but Hudson had been aware of
the issue for more than four years, and it was not new
information.

Reply and Initial Hearing

Hudson filed a reply on October 17, 2018. He noted that
Foster’s opposition admitted the payees on the checks were not
the payees identified in the account. Hudson, the guardian ad
litem, and the court staff had relied on the conservator’s
statements in the account. There was nothing in the account to
put Hudson on notice of any irregularities. They had the right to
rely on the statements of the court-appointed conservator.
In support of the reply, Hudson filed his own declaration.
He declared that he had no idea, and no reason to believe, the
checks listed in the disbursement schedule were not made
payable to the parties represented in the account and instead
were paid to Foster or his companies. Hudson was not aware of

12
all of the financial transactions undertaken by Foster. He was
shocked and disappointed that the person in whom he had placed
his trust and confidence took money from his account in this
manner. Hudson disputed Foster’s statement that all the
expenditures made by Foster or his companies were made for
Hudson’s benefit. Foster did not give him copies of every
document related to the account. When Hudson asked for copies
of his records, Foster said all of Hudson’s records were swept
away and destroyed in mud slides that affected Foster’s house in
Montecito, California. Before Miracle Mile filed its motion to
enforce payment, Hudson had no reason to believe Foster had not
paid Miracle Mile the amount approved by the court and no
reason to compare the payees on the checks to verify that they
matched the payees identified by Foster in his account.
A hearing was held on the motion to vacate the account on
October 25, 2018. Foster argued that even if he had taken money
as alleged in the motion, his email forwarding Miracle Mile’s
request for payment in 2014 put Hudson on notice and the
statute of limitations began to run. In response, Hudson argued
his own access to financial information did not absolve Foster
from providing correct information or require Hudson to verify
that the payees listed in the account were paid. The court
concluded that it did not have sufficient evidence to support a
fraud claim and gave Hudson an opportunity to file additional
points and authorities.

Supplemental Pleadings

On February 14, 2019, Hudson filed additional points and
authorities. He argued that under section 2103, the order

13
settling the final account of the conservator did not provide
protection from claims when the order was obtained by fraud or
misrepresentation in the petition or the account as to any
material fact. The conservator had a duty to accurately disclose
all disbursements, but had instead misrepresented the payee
information. The amounts in question were not reimbursements;
Foster had clearly identified reimbursements elsewhere in the
account.
Hudson argued that the statute of limitations did not begin
to run until Hudson discovered facts putting him on notice of the
fraud, specifically, when Miracle Mile filed the motion to enforce
the settlement on April 19, 2018. Hudson’s receipt of the
message forwarded from Miracle Mile did not put Hudson on
notice that the accounting was fraudulent, because Foster also
notified the court that medical liens totaling $300,000 remained
unsatisfied and would be Hudson’s responsibility to negotiate
after the conservator was released.
Hudson and the court staff who investigated the accounting
did not have access to physical copies of the checks. By
accurately listing check numbers and payment amounts, but
changing the identity of the payee, Foster demonstrated an
intent to conceal information and deceive Hudson and the court.
Hudson was harmed because the funds were not used to pay the
named payee for the services stated and the money is no longer in
Hudson’s account or available for his benefit. The
misrepresentations were sufficient to support vacating the order
approving the account.
Hudson submitted his declaration stating that Foster never
informed Hudson which unpaid liens were assigned to him to
negotiate after the conservatorship was terminated. Hudson

14
learned Miracle Mile’s bill was not paid as stated in the final
account when Miracle Mile filed its motion to enforce payment
and Hudson investigated the payment history. After Miracle
Mile denied receiving payment and the check image confirmed
that payment was not made as stated in the account, Hudson
paid Miracle Mile.
Foster filed additional points and authorities, but did not
cite any additional legal authority. He argued Hudson knew or
should have known of the facts claimed to constitute fraud when
Foster forwarded the email about Miracle Mile’s unpaid bill.
Hudson had ample opportunity to examine the account but had
offered no explanation for failing to discover the facts earlier.
On March 19, 2019, Hudson filed a supplemental reply.
He argued that the parties who reviewed the final account were
not required to confirm that checks had been accurately listed.
As a fiduciary, the conservator was required to be truthful and
not misrepresent material facts. Hudson identified
representations of fact in the account about payments to
Markzar, LA Litigation, and an entity named Sunset Studios
Media Solutions, which Hudson claimed were false. He
submitted the final account and copies of the check images. In
the final account, Foster represented that he paid $9,839.10 to
Markzar with check number 2227. The check image showed
check number 2227 was paid to Warp Film, Inc. Hudson also
submitted a declaration from Markzar as a custodian of records
stating the total cost of Hudson’s dental care was $8,790, and no
check or payment of any type was received on Hudson’s account
from Foster or any of his business entities. Hudson personally
paid for all dental care.

15
 In the final account, Foster represented LA Litigation was
paid $31,089.25 with check number 2258. In fact, the check
image showed check number 2258 was made payable to Warp
Media Development, Inc. Hudson submitted a declaration from
Marcelo Marciano as a custodian of records for LA Litigation.
Marciano confirmed check number 2258 in the amount of
$31,089.25 was not received on Hudson’s account at LA
Litigation. Hudson submitted a similar declaration from a
custodian of records for Sunset Studios Media Solutions.
The probate court held another hearing on March 27, 2019.
The court concluded that Hudson had not yet provided sufficient
information concerning his personal knowledge of the account to
determine whether he acted with diligence in seeking to vacate
the order. The court continued the motion and directed Hudson
to file a personal declaration within ten days of the continued
hearing date discussing in detail the circumstances surrounding
the discovery of the disputed issues with the account. Hudson
was to address his relevant prior communications with Foster,
and his understanding of any advances Foster made for Hudson’s
benefit during the administration of the conservatorship. Foster
was permitted to file a reply.
Hudson filed a supplemental declaration. When he
received the email from Foster to discuss payment to Miracle
Mile, Hudson believed there were outstanding bills that had not
been settled, as stated in the final account. The information that
he still owed money to Miracle Mile did not put Hudson on notice
that the payments listed in the final account were false. Hudson
described the meeting with Foster at Starbucks. Foster did not
say Miracle Mile’s bill had been paid already. Instead, Foster
confirmed Miracle Mile’s request was part of the unpaid medical

16
expenses which he had not been able to negotiate. Foster said
before Miracle Mile was paid, he was going to get a release
agreement signed, and thereafter, Miracle Mile would be paid.
Hudson never had any reason to distrust Foster, who was his
friend and advisor, and he had no reason to independently
confirm what Foster said. The matter did not come up again
until Miracle Mile filed its motion against Foster. Foster did not
give Hudson any reason in any of their discussions to think that
the checks listed in the final account were false or contained
misrepresentations. Hudson would not have been able to
discover the fraud without seeing the copies of cancelled checks.
Hudson asked Foster to purchase items and services for
him, and he was aware that Foster intended to reimburse himself
for the amounts that he spent on behalf of Hudson. The checks
represented in the final account as paid to creditors, but which
were actually paid to Foster, were not reimbursements, as shown
by the declarations from Markzar, LA Litigation, and Sunset
Studios Media Solutions. Hudson was also not aware of several
checks Foster wrote after the final account was filed with the
court and which were not approved by the court. Hudson
described the allegations of his civil action against Foster as we
Hudson also filed a declaration by his attorney Martin
Horwitz. Horwitz explained that the motion filed by Miracle Mile
against Foster in the personal injury case sought payment of
$20,099.89, which included the total principal of the bill, plus fees
and interest. Hudson asked Horwitz whether he needed to take
any action in response to the motion. The final account had
listed a payment of $10,000 to Miracle Mile, but Horwitz could
not tell from any of the documents whether this was a partial
payment or payment in full. Horwitz served a subpoena for

17
production of the bank records, which included the check images.
Had Miracle Mile not filed a motion to enforce its lien, the false
information in the final account would not have been discovered.
Horwitz also learned that Foster continued to sign checks on the
conservatorship account to himself and his companies in
February and March 2014, after the final account had been filed
with the court and approved by the guardian ad litem and
Hudson. Horwitz also described the civil lawsuit based on acts
that took place after the conservatorship terminated.
In May 2019, Foster filed a reply to the supplemental
declarations of Hudson and Horwitz, but did not cite any
additional legal authority. Foster argued the discrepancies
between the final account and the checks were not evidence of
fraud. Hudson had intimate involvement in all aspects of his
financial affairs. The parties had an understanding that Foster
would be reimbursed when Hudson received his personal injury
settlement, which is what occurred. The account was not
challenged during the statutory period to appeal, even though
Hudson had sufficient knowledge to do so. Hudson knew Miracle
Mile’s bill was unpaid, because Miracle Mile’s bill was the subject
of the email forwarded to Hudson in 2014, and Foster had offered
to discuss the matter.
Foster argued Marciano’s declaration was carefully drafted
to suggest that LA Litigation had not been paid at all. In fact, LA
Litigation was paid $23,500, and Marciano signed a release dated
October 18, 2014, admitting the full amount of any claim due to
LA Litigation was paid. Check number 2258, which was listed in
the final account as paid to LA Litigation on April 2, 2013, was
paid to Warp Media Development for multiple reimbursements to
medical providers or purchases on behalf of Hudson that had

18
been lumped together, including the amount paid to LA
Litigation.
Foster emphasized that the issue before the probate court
was whether extrinsic fraud existed to justify setting aside a final
order. Hudson had sufficient information from which he knew, or
should have known, about any potential error or discrepancy in
the account. If Hudson had any reason to suspect an error,
misstatement or deception, he should have acted to challenge the
accounting years earlier and should not be rewarded for
slumbering on his rights.
In support of the reply, Foster submitted the release that
Marciano signed on behalf of LA Litigation on October 18, 2014.
Foster submitted his own declaration as well. He attached
communications about conservatorship finances between Hudson
and Foster. Foster described funds advanced for specific
expenses, which were often coordinated through an employee of
Warp Films. Hudson had the ability to view cancelled checks,
disbursements, and bank statements at any time. Foster did not
believe he made any representation that was false, and he did not
believe Hudson relied on a representation by Foster to his
detriment. Hudson suffered no damage; no medical providers
came forward other than Miracle Mile. There has been no
showing of any fraud sufficient to set aside the court order
obtained within the framework of normal court procedures years
ago and which should be determinative.

Final Hearing on Motion to Vacate

The probate court held a final hearing on the motion to
vacate the account on June 5, 2019. Hudson acknowledged that

19
he received items paid for by Foster and he had understood that
Foster would be reimbursed for those items, but he argued that
reimbursements were a separate issue. Hudson was not
challenging the checks listed in the account as paid to Foster in
reimbursement for funds that he had advanced. In addition to
the reimbursements that Foster disclosed, Foster had written
checks to himself that he told the court were written to third
parties. Hudson later found out that Foster did not make the
payments to third parties that the account said had been made.
These checks were not reimbursements. Hudson was not
required to conduct a private accounting of the checks that his
fiduciary testified to making in the final account. Moreover,
Foster wrote additional checks to himself after the final account
was approved.
When Miracle Mile filed the motion against Foster alleging
more than $20,000 dollars was owed on Hudson’s account,
Hudson asked his attorney if he needed to take any action.
Horwitz saw the payment of $10,000 to Miracle Mile listed in the
disbursement schedule, but did not know if that was a full or
partial payment. Only after viewing the checks could they
determine the check listed in the final account was not made
payable to the creditor. Even learning that the check was paid to
Foster’s company did not provide notice of fraud until Miracle
Mile explained that no payment had been received at all. Hudson
was seeking to vacate the order approving the account in order to
file objections to the final account and determine whether the
fiduciary had acted properly.
Foster’s attorney argued that Hudson had notice and an
opportunity to investigate whether Miracle Mile’s bill was paid in
2014. It was unfair to litigate at this point when everyone’s

20
recollection had faded, Foster no longer had documents, and the
attorney who had represented Foster was no longer practicing.
Although Hudson told Foster during their meeting at Starbucks
to get a release from Miracle Mile, Foster had never provided
Hudson with a release or a canceled check showing payment to
Miracle Mile. Hudson did nothing and sat on his rights for too
long. Foster was disadvantaged because he had access to counsel
before the conservatorship was terminated, but could no longer
hire an attorney to represent him in his role as conservator and
would have to pay out of his own funds to defend himself. The
probate court took the matter under submission.

Probate Court Ruling

On June 18, 2019, the probate court issued a minute order
denying the motion to vacate the order approving the final
account. The order stated, “The Court finds that Nigel Hudson
has not provided sufficient information regarding his personal
knowledge of the circumstances of the accounting. Former
Conservator, Lucas Foster, with support, contends Nigel
[Hudson] knew about a certain reimbursement procedure he was
undertaking. Nigel Hudson, though specifically given [an]
opportunity to describe what he did or did not know about any
reimbursements, only addresses the subject in general terms.
Movant Nigel Hudson has not shown he was unaware of the
defects in the accounting at the time, or, at the very least, has not
shown he acted with reasonable diligence in seeking to vacate the

21
order based on the information that he should have known.”
Hudson filed a timely notice of appeal from the order.3

DISCUSSION

Appealability

Hudson contends that the order denying the motion to
vacate the approval of the final account is appealable, because it
was based on the court’s inherent equitable power to set aside an
order obtained through extrinsic fraud. We agree.
The only appealable orders in probate proceedings are
those listed in the Probate Code. (§§1300–1304; Code Civ. Proc.,
§ 904.1, subd. (a)(10); Kalenian v. Insen (2014) 225 Cal.App.4th
569, 575–576 (Kalenian); Estate of Stoddart (2004) 115
Cal.App.4th 1118, 1125–1126.) An order settling an account of a
fiduciary is an appealable order. (§1300, subd. (b).) An order
denying a motion to vacate an order on equitable grounds is
generally not appealable. (Kalenian, supra, 225 Cal.App.4th at p.
577; Estate of Baker (1915) 170 Cal. 578, 581–582 (Baker).)
Otherwise, an unsuccessful party would have two appeals from
the same judgment: one appeal provided by law within a limited
time period and another at an indefinite time in the future at the
convenience of the litigant after the denial of a motion to vacate
the judgment. (Baker, supra, 170 Cal. at p. 582.)

3Hudson’s corrected motion to take additional evidence on
appeal, which was filed with this court on March 22, 2021, is
denied. The evidence was not before the trial court and is not
necessary to resolve the issues on appeal.

22
 Under limited circumstances, however, a probate court
order denying a motion to vacate on equitable grounds is
appealable. (Kalenian, supra, 225 Cal.App.4th at p. 577.) If the
judgment or decree was final and appealable, then an order
refusing to vacate the judgment or decree is appealable “when,
for reasons involving no fault of the appealing party, he has never
been given an opportunity to appeal directly from the judgment
or decree.” (Baker, supra, 170 Cal. at p. 582.)
In this case, the order approving the final account was an
appealable order, so there is no concern of indirectly allowing an
appeal from a nonappealable order. The motion seeking to vacate
the order was based on equitable fraud in the form of
misrepresentations of fact by a fiduciary which deprived the
conservatee of a full and fair opportunity to object to the final
account prior to entry of the order approving the account. Under
the circumstances of this case, the order denying the motion to
set aside the order approving the final account is an appealable
order.

Standard of Review

We review an order denying equitable relief for an abuse of
discretion. (County of San Diego v. Gorham (2010) 186
Cal.App.4th 1215, 1230.) “In doing so, we determine whether the
trial court’s factual findings are supported by substantial
evidence [citation] and independently review its statutory
interpretations and legal conclusions [citations].” (Ibid.)
“‘In assessing whether any substantial evidence exists, we
view the record in the light most favorable to respondents, giving
them the benefit of every reasonable inference and resolving all

23
conflicts in their favor.’ [Citation.]” (Kramer v. Traditional
Escrow, Inc. (2020) 56 Cal.App.5th 13, 28.) “‘A finding . . . based
upon a reasonable inference . . . will not be set aside by an
appellate court unless it appears that the inference was wholly
irreconcilable with the evidence. [Citations.]’ [Citation.] ‘[W]hen
the evidence gives rise to conflicting reasonable inferences, one of
which supports the finding of the trial court, the trial court’s
finding is conclusive on appeal. [Citation.]’ [Citation.]” (Phillips
v. Campbell (2016) 2 Cal.App.5th 844, 851.)
“Normally, we must presume the trial court was aware of
and understood the scope of its authority and discretion under
the applicable law. [Citations.]” (Barriga v. 99 Cents Only Stores
LLC (2020) 51 Cal.App.5th 299, 333–334 (Barriga).) “If the
record demonstrates the trial court was unaware of its discretion
or that it misunderstood the scope of its discretion under the
applicable law, the presumption has been rebutted, and the order
must be reversed. [Citation.] ‘“[A]ll exercises of legal discretion
must be grounded in reasoned judgment and guided by legal
principles and policies appropriate to the particular matter at
issue.” [Citations.] Therefore, a discretionary decision may be
reversed if improper criteria were applied or incorrect legal
assumptions were made. [Citation.] Alternatively stated, if a
trial court’s decision is influenced by an erroneous understanding
of applicable law or reflects an unawareness of the full scope of
its discretion, it cannot be said the court has properly exercised
its discretion under the law. [Citations.] Therefore, a
discretionary order based on the application of improper criteria
or incorrect legal assumptions is not an exercise of informed
discretion and is subject to reversal even though there may be
substantial evidence to support that order. [Citations.] If the

24
record affirmatively shows the trial court misunderstood the
proper scope of its discretion, remand to the trial court is
required to permit that court to exercise informed discretion with
awareness of the full scope of its discretion and applicable law.’
(F.T. v. L.J. (2011) 194 Cal.App.4th 1, 15–16.)” (Barriga, supra,
51 Cal.App.5th at p. 334.)

Fiduciary Duty to Account Generally

It is undisputed that as conservator, Foster had a fiduciary
duty to Hudson that required Foster to account for transactions.
“There is a fiduciary relationship between the conservator and
conservatee. (§ 2101.)” (Conservatorship of Presha (2018) 26
Cal.App.5th 487, 498; Conservatorship of Lefkowitz (1996) 50
Cal.App.4th 1310, 1313.) The conservator must account to the
court for the property of the conservatee with information about
receipts, disbursements, transactions, and the remaining assets.
(Johnson v. Kotyck (1999) 76 Cal.App.4th 83, 89.) The
conservator must also prevent misappropriation of the
conservatee’s assets. (Ibid.) A fiduciary has a duty to provide
full disclosure of all material facts that affect the beneficiary’s
interest. (Ball v. Posey (1986) 176 Cal.App.3d 1209, 1214.) “Even
the lack of full disclosure will amount to fraud, because the
fiduciary’s obligation is affirmative.” (Ibid.)
Even without the conservatorship, the parties may have a
confidential relationship. “It is well settled that ‘[a] confidential
relationship exists when one party gains the confidence of the
other and purports to act or advise with the other’s interests in
mind; it may exist although there is no fiduciary relationship; it
is particularly likely to exist when there is a family relationship

25
or one of friendship.’ [Citations.]” (Estate of Sanders (1985) 40
Cal.3d 607, 615 (Sanders).)
“Fiduciary” and “confidential” have been used
interchangeably to describe a relationship in which one party has
a duty to act in the highest good faith for the benefit of the other
party. (Richelle L. v. Roman Catholic Archbishop (2003) 106
Cal.App.4th 257, 270.) When a person places confidence in
another person, the person who voluntarily accepted the
confidence cannot take any advantage from acts undertaken for
the other party without the knowledge or consent of that party.
(Ibid.) “Technically, a fiduciary relationship is a recognized legal
relationship such as guardian and ward, trustee and beneficiary,
principal and agent, or attorney and client [citation], whereas a
‘confidential relationship’ may be founded on a moral, social,
domestic, or merely personal relationship as well as on a legal
relationship. [Citations.] The essence of a fiduciary or
confidential relationship is that the parties do not deal on equal
terms, because the person in whom trust and confidence is
reposed and who accepts that trust and confidence is in a
superior position to exert unique influence over the dependent
party.” (Barbara A. v. John G. (1983) 145 Cal.App.3d 369, 382–
383.)

Equitable Power of the Probate Court to Vacate Order

The doctrine of res judicata applies in probate proceedings
to bar a party from relitigating a claim that has been finally
determined in a prior proceeding.4 (Lazzarone v. Bank of

4Courts have often used “res judicata” to refer to both
claim preclusion and issue preclusion. (DKN Holdings LLC v.

26
America (1986) 181 Cal.App.3d 581, 591 (Lazzarone).) However,
the probate court has inherent equitable authority to set aside an
order or decree when extrinsic factors have deprived a party of a
fair adversary hearing. (Sanders, supra, 40 Cal.3d 607, 614;
Estate of Charters (1956) 46 Cal.2d 227, 234–235; Jorgensen v.
Jorgensen (1948) 32 Cal.2d 13, 18 (Jorgensen).) Courts require a
showing of extrinsic fraud or mistake in order to balance the
public policy in favor of the finality of judgments with the policy
in favor of providing litigants a fair opportunity to present a case.
(Sanders, supra, 40 Cal.3d at p. 614.)
The requirements for equitable relief have been articulated
by some courts as a three-part test. (In re Marriage of
Stevenot (1984) 154 Cal.App.3d 1051, 1069 (Stevenot) [extrinsic
fraud]; Rappleyea v. Campbell (1994) 8 Cal.4th 975, 982 [extrinsic
mistake].) In order to set aside a final order based on extrinsic
fraud, “the moving party must demonstrate that he or she has a
meritorious case, that [they have] a satisfactory excuse for not
presenting a defense to the original action and that [they]
exercised diligence in seeking to set aside the default once the

Faerber (2015) 61 Cal.4th 813, 823–824.) “Claim preclusion, the
‘“‘primary aspect’”’ of res judicata, acts to bar claims that were, or
should have been, advanced in a previous suit involving the same
parties. [Citation.] Issue preclusion, the ‘“‘secondary aspect’”’
historically called collateral estoppel, describes the bar on
relitigating issues that were argued and decided in the first suit.
[Citation.]” (Id. at p. 824.) “To avoid future confusion, we will
follow the example of other courts and use the terms
‘claim preclusion’ to describe the primary aspect of
the res judicata doctrine and ‘issue preclusion’ to encompass the
notion of collateral estoppel. [Citation.]” (Ibid.)

27
fraud had been discovered.” (Stevenot, supra, 154 Cal.App.3d at
p. 1071.)

A. Extrinsic Fraud

In this case, Hudson’s claim that the conservator’s account
contained misrepresentations of material fact which amounted to
extrinsic fraud is both the basis of his case as well as his excuse
for failing to object within the original proceeding. The elements
of fraud are misrepresentation, knowledge of falsity, intent to
induce reliance on the misrepresentation, justifiable reliance on
the misrepresentation, and resulting damages. (Lazar v.
Superior Court (1996) 12 Cal.4th 631, 638.) The terms extrinsic
fraud and extrinsic mistake have been interpreted broadly,
encompassing “almost any set of extrinsic circumstances which
deprive a party of a fair adversary hearing.” (In re Marriage of
Park (1980) 27 Cal.3d 337, 342.)
Fraud is extrinsic when a party is prevented from fully
participating in the proceeding or deprived of the opportunity to
present a claim to the court by the fraudulent conduct of another
party, as opposed to the moving party’s own negligence.
(Stevenot, supra, 154 Cal.App.3d at p.1068; City and County of
San Francisco v. Cartagena (1995) 35 Cal.App.4th 1061, 1067
(Cartagena).) “The clearest examples of extrinsic fraud are cases
in which the aggrieved party is kept in ignorance of the
proceeding or is in some other way induced not to appear.
[Citation.]” (Sanders, supra, 40 Cal.3d at pp. 614–615.) Other
examples include “concealment of the existence of a community
property asset, failure to give notice of the action to the other
party, and convincing the other party not to obtain counsel

28
because the matter will not proceed (and then it does proceed).
([Stevenot, supra, 154 Cal.App.3d at p. 1069].)” (Cartagena,
supra, 35 Cal.App.4th at p. 1067.)
Fraud is generally considered intrinsic when a party had
notice of the action and an opportunity to present a case, but
unreasonably neglected to protect themselves from fraud or
mistake involving the merits of the proceeding. (Stevenot, supra,
154 Cal.App.3d at pp. 1069–1070.) “The public policy underlying
the principle of res judicata that there must be an end to
litigation requires that the issues involved in a case be set at rest
by a final judgment, even though a party has persuaded the court
or the jury by false allegations supported by perjured testimony.
This policy must be considered together with the policy that a
party shall not be deprived of a fair adversary proceeding in
which fully to present his case. Thus, equitable relief will be
denied where it is sought to relitigate an issue involved in the
former proceeding on the ground that allegations or proof of
either party was fraudulent or based on mistake, but such relief
may be granted if the party seeking it was precluded by fraud or
the mistake of the other party from participating in the
proceeding or from fully presenting his case. (Gale v. Witt, 31
Cal.2d 362, 365; Howard v. Howard, 27 Cal.2d 319, 321;
Westphal v. Westphal, 20 Cal.2d 393, 397; Larrabee v. Tracy, 21
Cal.2d 645; Olivera v. Grace, 19 Cal.2d 570, 575; Carr v. Bank of
America, 11 Cal.2d 366, 371–373; Purinton v. Dyson, 8 Cal.2d
322, 325–326; Ringwalt v. Bank of America, 3 Cal.2d 680, 684–
685; Caldwell v. Taylor, 218 Cal. 471, 476–479; Tracy v.
Muir, 151 Cal. 363, 371; see, Restatement, Judgments, p. 588; 3
Freeman, Judgments (5th ed.), §§ 1233–1235; 3 Pomeroy, Equity

29
Jurisprudence (5th ed.), p. 610.)” (Jorgensen, supra, 32 Cal.2d 13
at pp. 18–19.)
“The terms ‘intrinsic’ and ‘extrinsic’ fraud or mistake are
generally accepted as appropriate to describe the two different
categories of cases to which these policies of the law apply.
[Citation.] They do not constitute, however, a simple and
infallible formula to determine whether in a given case the facts
surrounding the fraud or mistake warrant equitable relief from a
judgment. [Citations.] It is necessary to examine the facts in the
light of the policy that a party who failed to assemble all his
evidence at the trial should not be privileged to relitigate a case,
as well as the policy permitting a party to seek relief from a
judgment entered in a proceeding in which he was deprived of a
fair opportunity fully to present his case.” (Jorgensen, supra, 32
Cal.2d 13 at p. 19.)
A critical wrinkle in the extrinsic fraud rule is applied to
fiduciaries. A party may obtain relief from a judgment when the
other party concealed facts in violation of a duty arising from a
trust or confidential relationship, even though the facts
concerned issues in the prior proceeding. (Jorgensen, supra, 32
Cal.2d 13 at p. 20.) “‘The failure to perform the duty to speak or
make disclosures which rests upon one because of a trust or
confidential relation is obviously a fraud, for which equity may
relieve from a judgment thereby obtained, even though the
breach of duty occurs during a judicial proceeding and involves
false testimony, and this is true whether such fraud be regarded
as extrinsic or as an exception to extrinsic fraud rule.’
[Citations.] In this state equitable relief has been granted from
final judgments settling the accounts of guardians,
administrators, or executors who withheld information that

30
would have enabled the beneficiaries to attack the
accounts. (Lataillade v. Orena, 91 Cal. 565, 576; Silva v. Santos,
138 Cal. 536, 541; Aldrich v. Barton, 138 Cal. 220, 223; Simonton
v. Los Angeles Trust & Sav. Bank, 192 Cal. 651, 655, 657; Morgan
v. Asher, 49 Cal.App. 172, 182; see Griffith v. Godey, 113 U.S. 89,
93.)” (Jorgensen, at pp. 20–21.)
“[W]here one is justified in relying, and does in fact rely,
upon false representations, his right of action is not destroyed
merely because opportunities for examination or means of
knowledge were open to him where no legal duty devolved upon
him to employ such means of knowledge. [Citations.]” (Stevens v.
Marco (1956) 147 Cal.App.2d 357, 378–379.) For example, in
Conservatorship of Coffey (1986) 186 Cal.App.3d 1431, 1443
(Coffey), the court concluded a life insurance beneficiary was not
required to oversee the activities of the conservator, scrutinize
accountings and detect omissions, warn the conservator or take
other action, to receive a benefit that the conservator had a
statutory duty to conserve. (Id. at p.1443.) “Sound policy
considerations require that we reject the imposition of such
a duty, for otherwise we would encourage the conservator who
had acted with less than ordinary care and diligence to hide his
failings by nondisclosure, hoping to eliminate or lessen his
liability by the beneficiary’s failure to detect the omission.”
(Ibid.)
“The courts are particularly likely to grant relief from a
judgment where there has been a violation of a special or
fiduciary relationship. The commentators have observed that
breach of a fiduciary duty may warrant setting aside the
judgment even though the same conduct in a nonfiduciary
relationship would not be considered extrinsic fraud. (See

31
Freeman, Judgments, supra, § 1235, pp. 2575–2576; Moore,
Moore’s Federal Practice (2d ed. 1948) [¶] 60.37.[1], p. 614;
Comment, Seeking More Equitable Relief From Fraudulent
Judgments: Abolishing the Extrinsic-Intrinsic Distinction (1981)
12 Pacific L.J. 1013, citing above at p. 1021, fns. 65–66.)”
(Sanders, supra, 40 Cal.3d at p. 615, fn. omitted.) “‘“Where there
exists a relationship of trust and confidence it is the duty of one
in whom the confidence is reposed to make full disclosure of all
material facts within his knowledge relating to the transaction in
question and any concealment of material facts is a fraud.”’
[Citations.] ‘“Where there is [such] a duty to disclose, the
disclosure must be full and complete, and any material
concealment or misrepresentation will amount to fraud sufficient
to entitle the party injured thereby to an action.”’ [Citations.]”
(Id. at p. 616.)
Some legal authorities characterize a fiduciary’s failure to
disclose material facts as a second form of extrinsic fraud
(Lazzarone, supra, 181 Cal.App.3d at pp. 596–597), while others
describe it as an exception to the requirement of extrinsic fraud
(Jorgensen, supra, 32 Cal.2d 13 at p. 19). It may also be
explained by the balance of public policy considerations: when a
judgment is obtained through a fiduciary’s violation of the duty of
disclosure to the moving party, the policy to provide a fair
adversary proceeding outweighs the policy in favor of finality,
and the moving party’s reasonable reliance on the disclosures of a
fiduciary is considered a satisfactory excuse for not presenting a
defense in a prior proceeding.

32
 B. Section 2103

The preclusive effect of probate court orders governing
guardians and conservators is established by statute. Section
2103 provides for finality, but incorporates the exception for
extrinsic fraud as it is applied to fiduciaries: “(a) When a
judgment or order made pursuant to this division becomes final,
it releases the guardian or conservator and the sureties from all
claims of the ward or conservatee and of any persons affected
thereby based upon any act or omission directly authorized,
approved, or confirmed in the judgment or order. For the
purposes of this section, ‘order’ includes an order settling an
account of the guardian or conservator, whether an intermediate
or final account. [¶] (b) This section does not apply where the
judgment or order is obtained by fraud or conspiracy or by
misrepresentation contained in the petition or account or in the
judgment or order as to any material fact. For the purposes of
this subdivision, misrepresentation includes, but is not limited to,
the omission of a material fact.” (Prob. Code, § 2103.)

C. Duty of Diligence to Discover Misrepresentations
of Material Fact

Generally, a party has a duty to take advantage of
discovery procedures to fully investigate the facts prior to entry of
judgment. (Stevenot, supra, 154 Cal.App.3d at pp. 1069–1070.)
To set aside a judgment based on “false facts” when the fraud was
part of the proceeding itself, a party must show “such facts could
not reasonably have been discovered prior to entry of judgment.”
(Cartagena, supra, 35 Cal.App.4th 1061, 1068.)

33
 A conservator’s presentation of an accounting to the court
for approval, however, is not an adversarial proceeding between
parties. The conservator is required to account and disclose
material information to the conservatee. There is a distinction
made “between cases where a plaintiff is under a duty to inquire
and those in which he has no such duty until he has notice of
facts sufficient to arouse the suspicions of a reasonable man.”
(Bennett v. Hibernia Bank (1956) 47 Cal.2d 540, 563 (Bennett).)
A plaintiff who has no duty to inquire because of a fiduciary
relationship does not need to show that he or she could not have
discovered the facts earlier with a diligent inquiry. (Ibid.)
Once a party actually becomes aware of facts which would
make a reasonably prudent person suspicious of wrongdoing by a
fiduciary, the party is put on inquiry notice and has a duty to
investigate. (Bennett, supra, 47 Cal.2d at p. 563; Alfaro v.
Community Housing Improvement System & Planning Assn., Inc.
(2009) 1356, 1394.) At that point, “[a] person with ‘actual notice
of circumstances sufficient to put a prudent man on inquiry’ is
deemed to have constructive notice of all facts that a reasonable
inquiry would disclose. [Citations.]” (E-Fab, Inc. v. Accountants,
Inc. Services (2007) 153 Cal.App.4th 1308, 1319.) It is
significant, however, that when a fiduciary relationship exists
between the parties, facts which would ordinarily require
investigation may not excite suspicion and less diligence is
required. (Bennett, supra, at pp. 559–560.) Therefore, a
conservator may show that representations of fact in the account
were so obviously false that the conservatee was not justified in
relying on them. If the conservatee was not actually aware of
facts prior to entry of judgment from which a reasonable person
would have suspected wrongdoing, however, the conservatee

34
satisfies the duty of diligence by showing the action to set aside
the judgment was filed within the limitations period, as
measured from the party’s actual discovery of formerly unknown
information. (Id. at p. 563.)5

D. Knox

As he did in the trial court, Foster relies heavily on the
legal authority of Knox, supra, 205 Cal.App.4th at page 428, for
the proposition that a party seeking to set aside a judgment for

5 Several authorities hold that an equitable action to set
aside a judgment obtained through extrinsic fraud or mistake is
governed by the three-year statute of limitations in Code of Civil
Procedure section 338, subdivision (d), including its discovery
rule. (Lightner Mining Co. v. Lane (1911) 161 Cal. 689, 702;
Lataillade v. Orena, supra, 91 Cal. at pp. 577–578; Turner v.
Milstein (1951) 103 Cal.App.2d 651, 659; Scott v. Dilks (1941) 47
Cal.App.2d 207, 209–210; Zastrow v. Zastrow (1976) 61
Cal.App.3d 710, 714–715 [the weight of California case law
applies statutory limitation periods in equitable actions to vacate
a judgment].) Although some courts have stated that an
equitable action to set aside a judgment based on extrinsic fraud
or mistake is not subject to statutory time limits (Department of
Industrial Relations v. Davis Moreno Construction, Inc. (2011)
193 Cal.App.4th 560, 570–571; Munoz v. Lopez (1969) 275
Cal.App.2d 178, 181), even under this view, courts employ the
statute of limitations by analogy to measure laches or
unreasonable delay in an action to set aside a judgment. (Vai v.
Bank of America (1961) 56 Cal.2d 329, 343; Protopappas v.
Protopappas (1963) 213 Cal.App.2d 659, 665; Barritt v. Barritt
(1933) 132 Cal.App. 538, 544.) An equitable action to set aside a
judgment is also subject to a defense of laches. (Stevenot, supra,
154 Cal.App.3d at p. 1071.)

35
extrinsic fraud based on misrepresentations of fact must show
the party could not reasonably have discovered the
misrepresentations prior to entry of judgment. To the extent that
Knox may be interpreted to mean that a conservatee with no
actual notice of facts that suggest wrongdoing has a duty to
conduct an investigation to verify the facts in a conservator’s
account prior to entry of judgment, we respectfully disagree.
In Knox, a successor conservator brought an action against
former conservator Lawrence A. Dean II for several causes of
action, including elder financial abuse. (Knox, supra, 205
Cal.App.4th at p.422.) Dean asserted in a summary judgment
motion that the probate court orders approving his accountings
were conclusive of the matters contained in them. (Ibid.) The
Knox court considered whether the successor’s claims were
precluded by section 2103, rather than as here whether to
exercise the court’s equitable power to set aside the orders
approving the accounts, but the same principles of extrinsic fraud
have been applied in both contexts.
Dean stated in his first accounting that he hired “Girlie
Kirbac” as an in-home caregiver for the conservatee and paid her
approximately $4,200 for her services. (Knox, supra, 205
Cal.App.4th at p. 428.) In opposition to summary judgment, the
successor conservator provided a declaration from Kirbac stating
that she had never met Dean and had not provided any services
for the conservatee. (Ibid.)
The Knox court expressed concern about the accuracy of
Dean’s representations in the first accounting, but the court
concluded that the successor conservator “failed to explain why
the first accounting did not provide her sufficient information to
investigate a fraud claim at the time. In order to establish the

36
second type of extrinsic fraud, ‘“it is insufficient for a party to
come into court and simply assert that the judgment was
premised on false facts. The party must show that such facts
could not reasonably have been discovered prior to the entry of
judgment.” [(Cartagena, supra, 35 Cal.App.4th at pp. 1067–
1068)]’ (In re Margarita D. (1999) 72 Cal.App.4th 1288, 1295.)
Thus, the fraud, if any, was intrinsic rather than extrinsic (see
Lazzarone, supra, 181 Cal.App.3d at pp. 588–589) and does not
provide an exception under Probate Code section 2103,
subdivision (b) to the preclusive effect of the order approving the
first accounting.” (Knox, supra, 205 Cal.App.4th at p. 428.)
We conclude Knox misinterpreted the requirements for
establishing extrinsic fraud by a fiduciary that are incorporated
in section 2103. Section 2103 clearly states that an order does
not operate to release a guardian or conservator when the order
is obtained by misrepresentation of material fact in the petition
or account. Within the context of a nonfiduciary relationship,
misrepresentations of material fact presented in a judicial
proceeding are considered intrinsic fraud, but misrepresentations
of material fact by a fiduciary constitute extrinsic fraud. Where a
conservator has misrepresented a material fact in an account
approved by the probate court, a party bringing a subsequent
action on behalf of the conservatee does not need to show that the
misrepresentation could not have been discovered prior to entry
of the order approving the account. (See Bennett, supra, 47
Cal.2d at p. 563.)
The Knox court relied on In re Margarita D., supra, 72
Cal.App.4th at page 1295, for the proposition that a party must
show “false facts” could not reasonably have been discovered
prior to the entry of judgment. (Knox, supra, 205 Cal.App.4th at

37
p. 428.) In re Margarita D., however, concerned a motion to set
aside a paternity judgment in a nonfiduciary context. (In re
Margarita D., supra, 72 Cal.App.4th at p. 1293.) In re Margarita
D. had in turn relied on Cartagena which also concerned a
paternity judgment and did not involve any statement of fact by a
fiduciary. (Id. at p. 1295; Cartagena, supra, 35 Cal.App.4th at
pp. 1066–1068.)
The Knox court’s interpretation of section 2103 incorrectly
imposes on fiduciary relationships the discovery obligation that
applies in non-fiduciary relationships, thereby substantially
limiting the protection of section 2103, subdivision (b). We
disagree with Knox to the extent it suggests that a conservatee
who is not aware of facts suggesting wrongdoing must show the
misrepresentations of material fact in a fiduciary’s account could
not reasonably have been discovered prior to the entry of
judgment.

Application

In denying Hudson’s motion to vacate, the probate court
found that Hudson failed to sufficiently describe his knowledge of
reimbursements, and as a result, he had not shown that he was
unaware of the defects in the final account at the time of its
approval.
The probate court’s ruling reflects the incorrect legal
standard provided in Knox. The court improperly placed the
burden on Hudson to show that he could not have discovered the
misrepresentations of material fact in the final account prior to
entry of the order. To the extent the court found Hudson was
aware of the defects in the final account at the time it was made,

38
the finding is not supported by substantial evidence. The probate
court focused on Hudson’s knowledge of reimbursements, but the
entries at issue did not concern reimbursements. The final
account included representations that 28 specific checks were
paid directly to Hudson’s creditors, when in fact those checks
were paid to Foster. In response to Hudson’s motion to set aside
the final account, Foster’s explanation was that these checks
were reimbursements that were poorly presented in the account
as direct payments to creditors, but Hudson showed that at least
two of the checks could not even be characterized as mislabeled
reimbursements because the creditors did not receive any
payment from Foster.
To the extent the probate court further found that Hudson
did not act with reasonable diligence to set aside the account
based on information that he should have known, the court’s
ruling did not apply the law governing the diligence of a
conservatee asserting extrinsic fraud against his fiduciary.
Rather, the court’s rational again reflects the incorrect statement
of the law made in Knox. The court placed a burden on Hudson
to scrutinize Foster’s account and faulted Hudson for delay in
seeking relief based on what he “should have known.” We have
clarified that Hudson was entitled to rely on the disclosures made
by Foster as his conservator and confidant, including after
approval of the final account. Hudson’s mere access to
information did not trigger an obligation to comb through the
records to verify the truth of Foster’s representations. A correct
inquiry into whether Hudson acted diligently would require the
court first to determine when Hudson actually discovered
formerly unknown information sufficient to put a reasonable
person on notice of fraud. We therefore remand the matter to

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provide the probate court an opportunity to determine whether
Hudson has met the requirements for relief, and if so, whether to
exercise its discretion to set aside the final account based on a
correct statement of the existing law with respect to fiduciaries.

DISPOSITION

The order denying the motion to vacate the order approving
the conservator’s final account is reversed and the matter is
remanded for the probate court to exercise its discretion.
Appellant Nigel Hudson is awarded his costs on appeal.

MOOR, J.

We concur:

BAKER, Acting P.J.

KIM, J.

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