BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 381
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          Date of Hearing:  April 2, 2013

                           ASSEMBLY COMMITTEE ON JUDICIARY
                                Bob Wieckowski, Chair
                      AB 381 (Chau) - As Amended: April 1, 2013

           SUBJECT  :  Estates and Trusts: Undue Influence and Elder Abuse

           KEY ISSUES  :

          1)Should an existing statute that imposes double-damage  
            liability on a person who misappropriates the property of a  
            principal under a power of attorney be extended to a person  
            who has misappropriated property by the use of undue influence  
            in bad faith, or by committing financial abuse of an elder or  
            dependent adult? 

          2)Should two provisions of the probate code that make a person  
            liable for double damages FOR MISAPPROPRIATING the property of  
            another person, by specified means, also make that person  
            liable for reasonable attorney's fees and costs? 

           FISCAL EFFECT  :  As currently in print this bill is keyed  
          non-fiscal. 

                                      SYNOPSIS
          
          In 2011 the Legislature enacted and the governor signed AB 354  
          (Chapter 55, Statutes of 2011).  That legislation specified that  
          Probate Code Section 859, which assessed double damages against  
          persons who misappropriated property belonging to the estate of  
          a decedent, conservatee, minor, or trust, would also apply to a  
          person who misappropriated property through the use of undue  
          influence in bad faith, or who committed financial abuse of an  
          elder or dependent adult, as defined in the Elder and Dependent  
          Adult Civil Protection Act (EDACPA).  However, AB 354 did not  
          likewise extend the double damage provisions in Probate Code  
          Section 4231.5 - which applies when a person exercising power of  
          attorney misappropriates property belonging to a principal - to  
          a person who misappropriates property by commission of an EDACPA  
          violation.  According to the author, this bill would correct two  
          shortcomings of AB 354.  First, it would extend the double  
          damages provisions of Probate Code Section 4231.5 to a person  
          who takes property by undue influence in bad faith, or through a  
          commission of an EDACPA violation.  Second, for both sections of  








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          the Probate Code, it would make the person who commits the  
          wrongful act liable for reasonable attorney's fees and costs, as  
          well as double damages.  According to the author, even with  
          double damages, there are instances in which the attorney's fees  
          incurred exceed the damages recovered.  This bill is sponsored  
          by the Conference of California Bar Associations.  The Executive  
          Committee of the Trusts & Estates Section of the State Bar  
          (TEXCOM) opposes this bill unless it is amended to remove the  
          provisions allowing for attorney's fees in addition to double  
          damages. 

           SUMMARY  :  Extends existing double damage provisions in the  
          Probate Code to a person who misappropriates property through  
          undue influence in bad faith, or through acts of financial elder  
          abuse, and provides that the person shall also be liable for  
          attorney's fees and costs in addition to those double damages.   
          Specifically,  this bill  :  

          1)Provides that a person who has taken, concealed, or disposed  
            of property belonging to a conservatee, a minor, an elder, a  
            dependent adult, a trust, the estate of a decedent, or has  
            taken, concealed, or disposed of property by the use of undue  
            influence in bad faith, or through the commission of elder or  
            dependent adult financial abuse, as defined, shall be liable  
            for reasonable attorney's fees and costs.  Specifies that the  
            remedies provided by this provision shall be in addition to  
            any other remedies available in law to a trustee, guardian or  
            conservator, or a person authorized to bring an action  
            pursuant to the Elder and Dependent Adult Civil Protection  
            Act.

          2)Provides that if a court finds that a person has in bad faith  
            wrongfully taken, concealed, or disposed of property belonging  
            to a principal under a power of attorney, or has taken,  
            concealed, or disposed of property by use of undue influence  
            in bad faith or through the commission of elder abuse or  
            dependent adult financial abuse, as defined, the person shall  
            be liable for twice the value of the property recovered and  
            shall also be liable for reasonable attorney's fees and costs.  


           EXISTING LAW  :

          1)Provides that a person found liable for taking, concealing, or  
            disposing of property belonging to the estate of a decedent,  








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            conservatee, minor, or trust through the use of undue  
            influence in bad faith, or through the commission of elder or  
            dependent adult financial abuse, is liable for twice the value  
            of the property taken.  (Probate Code Section 859.)

          2)Provides that a person who, in bad faith, wrongfully takes,  
            conceals, or disposes of property belonging to a principal  
            under a power of attorney is liable for twice the value of the  
            property taken.  (Probate Code Section 4231.5.) 

          3)Establishes the Elder and Dependent Adult Civil Protection Act  
            (EDACPA) to protect elderly and dependent adults from abuse,  
            including financial abuse.  (Welfare & Institutions Code  
            Section 15600 et seq.)

          4)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.  (Welfare &  
            Institutions Code Section 15610.30(a).)

          5)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.  (Welfare &  
            Institutions Code Section 15657.5)

           COMMENTS  :  According to the author, financial abuse of elders  
          and dependent adults has increased in recent years and will most  
          likely continue to do so as the Baby Boom generation ages.  In  
          2011 the Legislature enacted and the governor signed AB 354  
          (Chapter 55, Statutes of 2011).  That legislation specified that  
          Probate Code Section 859, which assessed double damages against  
          persons who misappropriated property belonging to the estate of  
          a decedent, conservatee, minor, or trust, would also apply to a  
          person who misappropriated property through the use of undue  
          influence or who committed financial abuse of an elder or  
          dependent adult.  However, AB 354 did not extend the double  
          damage provisions in Probate Code Section 4231.5 - which applies  
          when a person exercising power of attorney misappropriates  
          property belonging to a principal - to cases of elder and  
          dependent adult financial abuse.

          This bill - which is sponsored by the Conference of California  








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          Bar Associations - would, the author believes, correct two  
          shortcomings of AB 354 of 2011.  First, it would extend the  
          double damages provisions of Probate Code Section 4231.5 to a  
          person who takes property by undue influence in bad faith, or  
          through a commission of financial abuse of an elder or dependent  
          adult.  Second, for both sections of the Probate Code, this bill  
          would make the person who commits the wrongful act liable for  
          reasonable attorney's fees and costs, in addition to the double  
          damages.  According to the author, even with double damages,  
          there are instances in which the attorney's fees incurred exceed  
          the damages recovered. 

           The Non-Punitive Rationale for Attorney Fee-Shifting Statutes  :   
          For reasons discussed in more detail below, the Executive  
          Committee of the Trusts & Estates Section of the State Bar of  
          California (TEXCOM) opposes this bill unless it is amended to  
          remove the provisions granting attorney's fees and costs in  
          addition to double damages.  TEXCOM's opposition rests in large  
          measure, it appears, on the claim that the double damages is  
          already a "punitive" remedy, and this bill would add attorney's  
          fees and costs as a "separate" and "additional punitive remedy."  
            

          However, the Committee questions the assumption that statutes  
          providing for attorney's fees are intended to be "punitive."   
          Unlike "compensatory" damages, which are intended to compensate  
          the plaintiff for the actual damages suffered, and therefore  
          make the plaintiff whole, the purpose of punitive damages is, by  
          definition, to go beyond compensation in order to deter  
          recklessness and express moral disapproval of egregious conduct.  
           The rationale for awarding attorney's fees is neither to  
          compensate nor to punish, even though they are clearly  
          compensatory in that they compensate litigation costs.  Rather,  
          the more fundamental rationale for fee-shifting statutes is that  
          they provide an incentive for attorneys to take certain kinds of  
          cases.  For example, in Marron v. Superior Court (2003) the  
          court concluded that "an award of reasonable attorney fees and  
          costs under [EDACPA] cannot be considered punitive or exemplary  
          damages under Government Code section 818."  To be sure, in that  
          particular case the court only had to decide whether the  
          attorney's fees and costs provided under EDACPA were considered  
          "punitive" for purposes of the Tort Claims Act, which generally  
          prohibits punitive damages against a public entity.  But the  
          court's reasoning was more general.  In discussing the  
          underlying rationale for fee-shifting in EDACPA, the court found  








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          that those provisions were "intended to act as an incentive for  
          attorneys to accept elder or dependent adult abuse cases that  
          involve recklessness or more egregious conduct."  In support of  
          this conclusion, the court cited the unequivocal findings set  
          forth in the statute: "The Legislature further finds and  
          declares that infirm elderly persons and dependent adults are a  
          disadvantaged class, that cases of abuse of these persons are  
          seldom prosecuted as criminal matters, and few civil cases are  
          brought in connection with this abuse due to problems of proof,  
          court delays, and the lack of incentives to prosecute these  
          suits."  [Marron v. Superior Court (2003) 108 Cal. App. 4th  
          1049, 1065 (quoting subdivision (h) of Section 15600 of the  
          Welfare & Institutions Code.)]  Clearly the purpose of the award  
          of attorney's fees and costs in EDACPA --  like the Probate Code  
          sections amended in this bill - are intended to encourage  
          attorneys to take difficult cases that they might not otherwise  
          be inclined to take.

           ARGUMENTS IN SUPPORT  :  According to the sponsor, the Conference  
          of California Bar Associations (CCBA), this measure will "extend  
          current protections against misappropriation of property by  
          attorneys-in-fact to elders, dependent adults, and victims of  
          the attorney-in-facts bad faith undue influence.  The bill also  
          would add attorney's fees and costs to the award in successful  
          cases to recover property that has been misappropriated from  
          conservatees, minors, elders, dependent adults, decedent's  
          estates, or victims of bad faith undue influence, so that  
          rightful property owners do not have to make a decision as to  
          whether they can afford to recover their property, because the  
          attorney fees and costs might exceed the value (or even twice  
          the value) of the property recovered."  CCBA notes that SB 354  
          of 2011 - which CCBA also sponsored - assessed double damages  
          against persons who misappropriated property from conservatees,  
          wards, decedent's estates, and other vulnerable persons, also  
          protected victims of elder and dependent adult abuse, but it did  
          not make similar changes to the power of attorney law (Probate  
          Code Section 4231.5).  "AB 381 fills that gap," CCBA writes,  
          "ensuring that elders, dependent adults, and victims of bad  
          faith undue influence are also protected from bad faith  
          misappropriation by attorneys-in-fact."  However, CCBA adds,  
          these protections "are only valuable if people can use them, and  
          there are many instances where the attorney's fees incurred  
          seeking redress are likely to exceed even twice the value of  
          property that had been misappropriated."









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          California Advocates for Nursing Care Reform (CANHR) support  
          this bill because it believes that it is appropriately directed  
          to "the growing problem of powers of attorney being used to  
          financially abuse elders," and this bill will help targeted  
          seniors "recoup their property along with attorney's fees and  
          costs."  CANHR claims that elder financial abuse will continue  
          to grow as baby boomers age.  According to CANHR, "California  
          has the largest population of older Americans in the United  
          States, with the U.S. Census Bureau projecting the elderly  
          population increasing from 3.7 million to 6.4 million over the  
          next 20 years.  These projections, coupled with the financial  
          strength of the 'baby boom' generation, promises even more elder  
          financial abuse in years to come."  CANHR also defends the  
          awarding of attorney's fees and costs because there are many  
          cases in which attorney's fees exceed the value of the property  
          recovered. 

           ARGUMENTS IN OPPOSITION UNLESS AMENDED  :  The Executive Committee  
          of the Trusts & Estates Section of the State Bar (TEXCOM)  
          opposes this bill unless it is amended to remove the provisions  
          awarding attorney's fees and costs.  It supports extending the  
          double damages provided for in Section 4231.5 (the power of  
          attorney provision) to persons who misappropriate property by  
          undue influence, or by committing financial abuse against an  
          elder or dependent adult.  TEXCOM argues and cites case law in  
          support of its view that the "double-recovery remedy is  
          [already] a punitive remedy."  TEXCOM claims that AB 381 will  
          add attorney's fees and costs "as a separate punitive remedy."   
          TEXCOM believes that adding attorney's fees and costs to an  
          already punitive double-recovery remedy is especially  
          problematic in these types of case, which often involve  
          "intra-family disputes that are difficult to resolve because of  
          emotional issues.  Because the alleged victim in many of these  
          cases is dead or incapacitated and the circumstances ambiguous,  
          it is difficult to know the alleged victim's intent, for  
          example, in creating a joint tenancy account or in making a  
          gift.  Raising the bar in an already difficult situation even  
          higher" will make "these fraught cases even more difficult to  
          settle and further burden the courts."  Finally, TEXCOM argues  
          that the additional remedy of attorney's fees is not necessary  
          because attorney's fees are already available to successful  
          litigants in elder abuse cases. 

           









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          REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          Conference of State Bars of California (sponsor)
          California Association for Health Services at Home 
          California Association for Nursing Home Reform 
          California Commission on Aging 
          California Police Chiefs Association 
          One Individual 

           Opposition 
           
          Trusts and Estates Section, State Bar of California (unless  
          amended)
           
          Analysis Prepared by  :    Thomas Clark / JUD. / (916) 319-2334