BILL ANALYSIS                                                                                                                                                                                                    Ó






                             SENATE JUDICIARY COMMITTEE
                             Senator Noreen Evans, Chair
                              2011-2012 Regular Session


          AB 354 (Silva)
          As Amended March 21, 2011
          Hearing Date: June 7, 2011
          Fiscal: No
          Urgency: No
          TW   
                    

                                        SUBJECT
                                           
                   Estates and Trusts:  Property:  Wrongful Taking

                                      DESCRIPTION  

          This bill would provide that when a person has taken, concealed, 
          or disposed of the real or personal property of a conservatee, 
          minor, estate of a decedent, or trust by the use of undue 
          influence in bad faith or through the commission of elder or 
          dependent adult financial abuse, the person is liable for twice 
          the value of the property recovered in a conservatorship, 
          guardianship, estate, or trust proceeding.  

                                      BACKGROUND  

          Since 1851, the Legislature has provided for an award of double 
          damages with respect to recovered property.  In 2002, the 
          Legislature reorganized the various statutes authorizing a 
          probate court to decide quiet title actions involving trusts, 
          estates of decedents, minors, or conservatees.  (SB 669 
          (Poochigian, Ch. 49, Stats. 2001).)  As part of this 
          reorganization, courts were given authority to award double 
          damages of the value of property recovered from a person who has 
          wrongfully taken real or personal property from a conservatee, 
          minor, estate of a decedent, or trust.

          This bill, sponsored by the Conference of California Bar 
          Associations, would extend the double damages award to instances 
          when the wrongful taking of real or personal property was a 
          result of undue influence in bad faith or through the commission 
          of elder or dependent adult financial abuse.

                                                                (more)



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                                CHANGES TO EXISTING LAW
           
           Existing law  provides that a guardian, conservator, claimant, 
          personal representative, or trustee can file a petition with the 
          court to recover the real or personal property of a minor, 
          conservatee, estate of a decedent, or trust held by another.  
          (Prob. Code Sec. 850 et seq.)  
           Existing law  provides that, if the court finds that a person has 
          in bad faith wrongfully taken, concealed, or disposed of 
          property belonging to the estate of a decedent, conservatee, 
          minor, or trust, the person shall be liable for twice the value 
          of the property recovered by an action under this part.  This 
          remedy is in addition to any other remedies available in law to 
          a trustee, guardian or conservator, or personal representative 
          or other successor in interest of a decedent.  (Prob. Code Sec. 
          859.)

           Existing law  defines "undue influence" as the use, by one in 
          whom a confidence is reposed by another, or who holds a real or 
          apparent authority over him, of such confidence or authority for 
          the purpose of obtaining an unfair advantage over him, taking an 
          unfair advantage of another's weakness of mind, or taking a 
          grossly oppressive and unfair advantage of another's necessities 
          or distress.  (Civ. Code Sec. 1575.)

          Existing law  defines "financial abuse" as the taking, secreting, 
          appropriating, obtaining, or retaining real or personal property 
          of an elder or dependent adult for a wrongful use or with intent 
          to defraud, or both or by undue influence.  (Welf. & Inst. Code 
          Sec. 15610.30.)

           This bill  would provide that when a person has taken, concealed, 
          or disposed of the real or personal property of a conservatee, 
          minor, estate of a decedent, or trust by the use of undue 
          influence in bad faith or through the commission of elder or 
          dependent adult financial abuse, the person is liable for twice 
          the value of the property recovered in a guardianship, 
          conservatorship, estate, or trust proceeding.

                                        COMMENT
           
          1.  Stated need for the bill  
          
          The author writes:
          
            Current law is unclear as to whether a person who uses elder 
                                                                      



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            abuse or intentional undue influence to steal from an elder or 
            dependent adult is liable for the same double-damages that he 
            or she would be liable for if the wrongful taking had been 
            directly from the elder's estate or trust.  Although there are 
            no reported cases interpreting this provision, there has been 
            at least one unpublished appellate opinion . . . that holds 
            that the bad faith action of an individual, using undue 
            influence on an elderly parent, is not sufficient to allow a 
            trial court to award double damages.

            If the appellate court's view is embraced in other cases, it 
            would threaten to undercut the broad protections the 
            Legislature has consistently intended by enacting a series of 
            statutes dating back to 1851 to put potential wrongdoers on 
            notice of their exposure to double liability for bad faith 
            taking of estate property in all trust, guardianship, and 
            conservatorship cases.

          The Conference of California Bar Associations (CCBA), the 
          sponsor of this bill, writes:

            AB 354 would eliminate the ambiguity in existing law by 
            amending Probate Code ÝSection] 859 to specifically include 
            willful undue influence and elder financial abuse as Ýthe] 
            bases for imposing double damages liability on wrongdoers who 
            prey upon the elderly and infirm.

          2.  Awarding double damages in cases of undue influence  

          This bill would provide that when a person has taken, concealed, 
          or disposed of real or personal property by the use of undue 
          influence in bad faith, the person is liable for twice the value 
          of the property recovered in a guardianship, conservatorship, 
          estate, or trust proceeding.  Existing law provides an award of 
          double damages if the court finds that a person in bad faith 
          wrongfully has taken, concealed, or disposed of real or personal 
          property belonging to the estate of a decedent, conservatee, 
          minor, or trust.  (Prob. Code Sec. 859.)  The award is 
          calculated at twice the value of the property recovered.  

          The author argues that existing law is unclear whether a person 
          who uses undue influence to steal from an elder or dependent 
          adult is liable for the same double damages for which he or she 
          would be liable if the wrongful taking had been directly from 
          the elder's estate or trust.  The California Department of 
          Consumer Affairs (CDCA), neutral on this bill, "finds no 
                                                                      



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          objection to this bill's clarification of the law."  The author 
          argues that, in an unpublished court decision, the court did not 
          award double damages when the taking involved undue influence 
          committed in bad faith on an elder.  In that case, the court 
          determined whether the son's undue influence exerted on his 
          father in order to get his father to write checks payable to the 
          son constituted a wrongful taking, concealing, or disposing of 
          property belonging to the father's trust.  (Estate of Wolf (Aug. 
          31, 2000, B126543) Ýnonpub. opn.] pg. 17.)  The court held that 
          because the father gave the money to the son, albeit through 
          undue influence by the son, the evidence was insufficient to 
          prove that the son in bad faith wrongfully took, concealed, or 
          disposed of property in or belonging to the trust.  (Id.)  

          On the other hand, the court in Estate of Young (2008) 160 
          Cal.App.4th 62, 80, 84 found that transfers of real and personal 
          property into trusts for which no beneficial purpose to the 
          testator could be found demonstrated undue influence and/or 
          fraud, which supported an award of double damages.   It appears 
          that part of the confusion regarding a court's discussion of 
          undue influence centers around the evidence necessary to be 
          proven in proceedings to recover property.  Under Probate Code 
          Section 850, the petitioner must prove that the property 
          rightfully belonged to the minor, conservatee, decedent, or 
          trust.  To do so, the petitioner must provide proof that the 
          transfers of the property were defective.  Such proof may be 
          shown through undue influence and fraud.  Once title to the 
          property has been established, the court may then consider 
          awarding double damages against the wrongful taker of the 
          property upon proof that the taking was wrongful and made in bad 
          faith.

          In Estate of Kraus (2010) 184 Cal.App.4th 103, the court, in 
          deciding whether to award double damages, reasoned that "Ýt]he 
          statutory emphasis is not on to whom the property belongs, but 
          whether the person in possession in bad faith wrongfully 
          acquired it."  (Id. at 117.)  Proof of wrongfully taking, 
          concealing, or disposing of property in bad faith requires a 
          higher level of evidence.  This is because double damages are 
          punitive in nature.  (See Estate of Young (2008) 160 Cal.App.4th 
          62, 88.)  

          The question becomes whether it is appropriate to award double 
          damages for undue influence.  Undue influence arguably leads to 
          the wrongful taking of property.  In order to prove undue 
          influence, existing law requires a showing that the person used 
                                                                      



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          the confidence of or real or apparent authority over the victim 
          in order to obtain an unfair advantage over the victim, take an 
          unfair advantage of the victim's weakness of mind, or take a 
          grossly oppressive and unfair advantage of the victim's 
          necessities or distress.  (Civ. Code Sec. 1575.)  This undue 
          influence potentially results in the ability to wrongfully take 
          property away from the victim, either by gaining direct power 
          over the property of the victim as in the Young case, or by 
          influencing the victim to transfer the property in a way the 
          victim, if he or she had full mental and physical capacity, 
          would not normally have done, as in the Wolf case.

          Over the years, the Legislature has enacted statutes to protect 
          California citizens who have a diminished ability to protect 
          themselves and their assets and to deter financial predators 
          through the use of punitive damages.  (See Comment 3.)  This 
          bill would authorize the use of punitive damages in the form of 
          twice the value of the property recovered when the financial 
          predator utilized undue influence in bad faith to obtain the 
          real or personal property directly from the person or trust or 
          by convincing the conservatee, minor, or decedent to transfer 
          the property.  This award is in keeping with the Legislature's 
          history of financial protection for these cases.   
          
          3.  Awarding double damages in cases of elder and dependent adult 
            financial abuse 

           This bill would provide that when a person has taken, concealed, 
          or disposed of the property through the commission of elder or 
          dependent adult financial abuse, the person is liable for twice 
          the value of the property recovered in a guardianship, 
          conservatorship, estate, or trust proceeding.  In 1992, the 
          Legislature enacted the Elder Abuse and Dependent Adult Civil 
          Protection Act (EADACPA).  (SB 679 (Mello, Ch. 774, Stats. 
          1991).)  EADACPA was established in order to provide enhanced 
          remedies to ensure adequate representation of victims in cases 
          of elder or dependent adult physical and financial abuse and 
          neglect.  In 2005, the Legislature enacted AB 2611 (Simitian, 
          Ch. 886, Stats. 2004), which separated out the provisions for 
          elder and dependent adult financial abuse.  

          Existing law defines "financial abuse" as the taking, secreting, 
          appropriating, obtaining, or retaining real or personal property 
          of an elder or dependent adult for a wrongful use or with intent 
          to defraud, or both, or by undue influence.  (Welf. & Inst. Code 
          Sec. 15610.30.)  EADACPA provides an award of punitive damages 
                                                                      



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          for elder and dependent adult financial abuse.  (Welf. & Inst. 
          Code Sec. 15657.5.)  

          As discussed in Comment 2, double damages are punitive in 
          nature.  (See Estate of Young (2008) 160 Cal.App.4th 62, 88.)  
          This bill would authorize the use of punitive damages in the 
          form of twice the value of the property recovered when the 
          financial predator committed elder or dependent adult financial 
          abuse to obtain the real or personal property directly from the 
          person or trust or by convincing the conservatee, minor, or 
          decedent to transfer the property.  This award is in keeping 
          with the Legislature's history of awarding punitive damages in 
          these cases.   


           Support  :  Trusts and Estates Section of the State Bar of 
          California

           Opposition  :  None Known

                                        HISTORY
           
           Source  :  Conference of California Bar Associations

           Related Pending Legislation  :  None Known

           Prior Legislation  :  See Background and Comment 3.

           Prior Vote  :

          Assembly Floor (Ayes 71, Noes 0)
          Assembly Committee on Judiciary (Ayes 10, Noes 0)

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