BILL ANALYSIS Ó
AB 381
Page 1
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