BILL ANALYSIS Ó
AB 140
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Date of Hearing: April 2, 2013
ASSEMBLY COMMITTEE ON JUDICIARY
Bob Wieckowski, Chair
AB 140 (Dickinson) - As Introduced: January 17, 2013
As Proposed to be Amended
SUBJECT : FINANCIAL ABUSE: UNDUE INFLUENCE
KEY ISSUE : IN ORDER TO BETTER PROTECT SENIORS AND DEPENDENT
ADULTS, SHOULD THE DEFINITION OF "UNDUE INFLUENCE" BE MODIFIED
TO BETTER REFLECT CURRENT KNOWLEDGE ABOUT ELDER FINANCIAL ABUSE?
FISCAL EFFECT : As currently in print this bill is keyed
fiscal.
SYNOPSIS
This bill seeks to modify the existing definition of "undue
influence" as it applies to the financial abuse of elders and
dependent adults. Under the Elder and Dependent Adult Civil
Protection Act (EDACPA), a person is guilty of financial abuse
of an elder or dependent adult for misappropriating the property
of an elder or dependent adult by undue influence, as defined in
Section 1575 of the Civil Code. That section defines undue
influence as (1) using a confidence or real or apparent
authority for the purpose of obtaining an unfair advantage; (2)
taking unfair advantage of another's weakness of mind; or (3)
taking a grossly oppressive and unfair advantage of another's
necessities or distress. According to the author, the existing
definition has not been changed since 1872 and does not take
account of contemporary understandings of financial elder abuse.
This bill, therefore, would create a definition of "undue
influence" for purposes of EDACPA and relevant sections of the
Probate Code; it would not change Civil Code Section 1575, which
will still apply to contracts generally. This bill would define
"undue influence" in terms of "excessive persuasion," and unlike
the strict elements set forth in the existing definition, this
bill would set forth a number of factors that the court should
consider, including such things as the vulnerability of the
victim, the apparent authority and tactics used by the
influencer, the equity of the result and the extent to which it
diverges from the victim's intent. The bill is sponsored by the
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California Advocates for Nursing Home Reform. It is opposed by
the Civil Justice Association of California, the California
Chamber of Commerce, and other trade associations unless amended
to address their concerns that the language of the bill is too
broad. In an effort to partially address opposition concerns,
the author will amend the bill in this Committee. The bill
summary below reflects the bill as proposed to be amended.
SUMMARY : Modifies the definition of undue influence.
Specifically, this bill :
1)For purposes of the Elder and Dependent Adult Civil Protection
Act (EDACPA) and the Probate Code, defines "undue influence"
as excessive persuasion that causes another person to act or
refrain from action and results in inequity. In determining
whether a result was produced by undue influence, requires the
court to consider all of the following:
a) The vulnerability of the victim;
b) The influencer's apparent authority;
c) The actions or tactics used by the influencer;
d) The equity of the result.
2)Provides that the above definition of undue influence is
intended to supplement common law, without superseding or
interfering with that law.
3)Provides that nothing in this bill shall be construed to imply
that an inequitable result, by itself, constitutes undue
influence or excessive persuasion.
EXISTING LAW :
1)Defines "undue influence" as:
a) Using a confidence or a real or apparent authority over
another person for the purpose of obtaining an unfair
advantage over that person;
b) Taking unfair advantage of another's weakness of mind;
or
c) Taking a grossly oppressive and unfair advantage of
another person's necessities or distress. (Civil Code
Section 1575.)
2)Establishes EDACPA to protect elderly and dependent adults
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from abuse. (Welfare & Institutions Code Section 15600 et
seq. Unless stated otherwise, all further statutory
references are to that code.)
3)Provides that "financial abuse" occurs when a person takes,
secretes, appropriates, obtains, or retains real or personal
property of an elder or dependent adult for a wrongful use, or
with intent to defraud, or by undue influence, or when a
person assists another in that conduct. (Sections
15610.30(a).)
4)When it is proven by a preponderance of the evidence that the
defendant is liable for financial abuse of an elder or
dependent adult, requires the court to award compensatory
damages and attorney's fees and costs. (Section 15657.5.)
5)Provides that the execution or revocation of a will is
ineffective if it was procured by duress, menace, fraud or
undue influence. (Probate Code Section 6104.)
COMMENTS : This bill seeks to modify the definition of undue
influence and apply that definition to actions brought under
EDACPA and the Probate Code. By its own terms, the bill would
not alter the common law definition of undue influence, but
rather purports to supplement it.
While undue influence is defined under the Civil Code, the
author notes that this definition dates back to 1872 and has not
been updated since then. Moreover, there is no definition of
undue influence in the Probate Code, even though the Probate
Code provides that the execution or revocation of a will is
ineffective if it was procured by "undue influence."
Because of the general nature of the definition of "undue
influence" in Civil Code Section 1575, a body of California case
law has fleshed out the elements of "undue influence." Although
it did not deal with an elderly victim, one of the seminal cases
on undue influence in California is Odorizzi v. Bloomfield
(1966) 246 Cal.App.2d 123. The court, in upholding the
plaintiff's action, described undue influence as "a shorthand
legal phrase used to describe persuasion which tends to be
coercive in nature, persuasion which overcomes the will without
convincing the judgment. The hallmark of such persuasion is
high pressure, a pressure which works on mental, moral, or
emotional weakness to such an extent that it approaches the
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boundaries of coercion. In this sense, undue influence has been
called overpersuasion." (Id. at 130.) The court found that the
characteristics of overpersuasion include: "(1) discussion of
the transaction at an unusual or inappropriate time, (2)
consummation of the transaction in an unusual place, (3)
insistent demand that the business be finished at once, (4)
extreme emphasis on untoward consequences of delay, (5) the use
of multiple persuaders by the dominant side against a single
servient party, (6) absence of third-party advisers to the
servient party, (7) statements that there is no time to consult
financial advisers or attorneys." (Id. at 133.)
As with elements set forth in Odorizzi, the factors set forth in
this bill focus on the nature and context of "persuasion."
However, where Odorizzi speaks in terms of "coercive" or "high
pressure" persuasion, especially pressure that works on a
person's "mental, moral, or emotional weakness," this bill would
define undue influence as any "excessive persuasion" that causes
a person "to act or refrain from acting and results in
inequity." In short, this bill appears not only to modify but
arguably expands the definition of "undue influence" by
incorporating considerations of the equity (or fairness) of the
result as opposed to only looking to the methods and context of
persuasion that overcome the will. An unfair result would not
in itself be evidence of excessive persuasion, but it would be
something that a court would consider along with the methods and
context of persuasion.
Although opponents of this bill (as detailed below) focus on the
potential vagueness and over-breadth of the words "excessive"
and "inequity," it should be noted that that is not all that the
bill says. The bill lays out several factors that a court shall
consider in determining whether the persuasion was "excessive"
and whether it led to an "inequity." These factors appear to be
more or less consistent with the language in Civil Code Section
1575 and the factors set forth in Odorizzi. That is, they look
to the vulnerability of the victim (which the 1872 statute more
prosaically defines as "weakness of mind;" to the apparent
authority of influencer; to the influencer's tactics and the
settings in which the persuasion took place; and the equity of
the result in light of the victim's intent and the value of the
things exchanged.
It is likely true, as opponents contend, that the definition and
factors set forth in this bill are potentially more expansive
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than in existing statute and case law. The author contends,
however, that this new definition is needed in order to take
account of our contemporary knowledge about how elders are
unduly influenced and the nature and extent of financial elder
abuse that occurs today - not that which might have occurred in
1872. Indeed, the existing definition of "undue influence"
appears in the Civil Code provisions governing contracting
generally; it was written well before the Legislature determined
that elder financial abuse had become a significant problem and,
accordingly, enacted EDACPA. The financial abuse provisions of
EDACPA are premised, at least in part, on the view that
financial agreements entered into by the elderly should not be
subject only to the general rules of contract, but should
instead be subject to special scrutiny. Moreover, the author
and sponsor contend that the language of the existing definition
does not adequately capture the nuances of elder financial
abuse. For example, an elderly person's cognitive vulnerability
may not rise to the level of "weakness of mind;" persons who
take advantage of the elderly are not always persons with real
or apparent authority; and an elderly person may have
considerable assets and thus not suffer from "necessities or
distress" as usually understood.
ARGUMENTS IN SUPPORT : According to the sponsor, the California
Advocates for Nursing Home Reform (CANHR), the current
definition of "undue influence" does not adequately take account
of the realities of elder financial abuse. Specifically, CANHR
notes that "undue influence" under the existing statute must be
predicated on the existence of a "confidential relationship,"
the victim's "weakness of mind," and "grossly oppressive"
conduct that takes unfair advantage of another's "necessities or
distress." According to CANHR, this terminology does not
describe the kinds of situations that constitute elder financial
abuse. For example, the perpetrators of elder abuse are not
always in a "confidential relationship" with the elder. In
addition, we would no longer characterize the recognized
vulnerabilities of the elderly as "weakness of mind." Finally,
the unfair advantage does not always arise out of "necessities
or distress," because "predators prefer to target victims with
readily available liquid assets." In short, under the current
definition "elders who have capacity and resources and who are
exploited by persons who are not confidants cannot recover."
ARGUMENTS IN OPPOSITION UNLESS AMENDED : The Civil Justice
Association of California, the California Chamber of Commerce,
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and a coalition of other business and trade associations oppose
this bill unless amended. Opponents contend that the bill is
overbroad, could result in unwarranted liability in many
business transactions involving people over the age of 65 years,
and further claim that existing law "appropriately encompasses
the situation where a person with authority or apparent
authority wrongfully takes advantage of a person's weakness of
mind." This bill, opponents contend, would "broadly expand the
definition of undue influence to any excessive persuasion by an
expert that results in an inequity" based on "a long list of
factors that are impossible for a business to know" when engaged
in a transaction with a person. Opponents also contend that "AB
140 does not require that the person know of the person's
weakness, or that the wrongdoer intended to use manipulative
tactics in order take the unfair advantage. This new
broadly-structured definition could apply to such cases where a
65-year-old in a mid-life crisis buys a car, a house, stocks,
electronics, or a boat. Under AB 140, businesses may need to
ask a person's age, education or emotional state before engaging
in a sales transaction in order to limit its liability." In
sum, opponents believe that this bill is unnecessary and that
its broad definition of "undue influence" will lead to lawsuits
in any situation "where a person has significant buyer's
remorse."
Opponents write that they would remove their opposition only if
the definition of "undue influence," on page 3, lines 18-20 of
the bill in print is amended as follows:
"Undue influence" means the use of manipulative and unfair
tactics intended to cause excessive persuasion that causes
another person to act or refrain from acting and results
in inequity.
However, this proposed amendment potentially creates two
additional problems. First, the word "manipulative" is
arguably just as vague as the words in the bill to which the
opponents object. After all, any attempt at persuasion tries
to manipulate the target of the persuasion to some extent.
Second, the opposition's proposed amendment would require the
elderly plaintiff to prove "intent" to cause an inequitable
result. As a practical matter, this intent may be very
difficult to prove, even where unquestionably coercive and
high pressure tactics led to an obvious inequity.
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PROPOSED AUTHOR'S AMENDMENT : Opponents' primary contention
appears to be that this bill improperly focuses on the equity
of the "results" of the persuasion instead of the tactics,
conditions, and the overall context in which the persuasion
took place. This would be a fair criticism if the bill
allowed a court to find undue influence solely on the basis
of an inequitable result, even where the result reflected the
elderly person's intent and no coercive or oppressive tactics
were used. In an effort to address this concern the author
will take the following amendment in this Committee.
- On page 4 after line 2 insert a new subdivision which
reads:
(e) Nothing in this section shall be construed to imply that
an inequitable result, by itself, constitutes undue influence
or excessive persuasion.
While this amendment may not satisfy the opposition, the
Committee agrees that it addresses much of the opposition's
concern without creating the potential pitfalls of the
opposition's proposed amendment.
REGISTERED SUPPORT / OPPOSITION :
Support
California Advocates for Nursing Home Reform (sponsor)
Alzheimer's Association
California Alliance for Retired Americans
California Commission on Aging
California Police Chiefs Association
Consumer Federation of California
Institute on Aging
Older Women's League of California (OWL)
Ohlone/East Bay OWL
Three individuals
Opposition
California Association of Health Facilities
California Building Industry Association
California Business Properties Association
California Chamber of Commerce
California Manufacturers and Technology Association
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Civil Justice Association of California
Western Electoral Contractors Association
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334