BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 381| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 381 Author: Chau (D) Amended: 5/24/13 in Senate Vote: 21 SENATE JUDICIARY COMMITTEE : 6-0, 6/4/13 AYES: Evans, Anderson, Corbett, Jackson, Leno, Monning NO VOTE RECORDED: Walters ASSEMBLY FLOOR : 77-0, 4/15/13 - See last page for vote SUBJECT : Estates and trusts: undue influence and elder abuse SOURCE : Conference of California Bar Associations DIGEST : This bill provides that a person may be liable for attorneys fees and costs if he/she, in bad faith, through undue influence, or through the commission of elder abuse, has wrongfully taken, concealed, or disposed of property that belongs to a conservatee, minor, elder, dependent adult, trust, or decedent's estate. This bill also provides that a person may be liable for attorney's fees and costs if he/she, in bad faith, has wrongfully, taken, concealed, or disposed of property that belongs to a principal under a power of attorney. This bill provides that a person who, by the use of undue influence in bad faith or through the commission of elder or dependent adult financial abuse, has taken, concealed, or disposed of property that belongs to a principal under a power of attorney is liable for twice the value of the property, and may be liable for attorney's fees and costs. CONTINUED AB 381 Page 2 ANALYSIS : Existing law, the Elder Abuse and Dependent Adult Civil Protection Act (EADACPA), generally provides civil protections and remedies for victims of elder and dependent adult abuse and neglect. (Welfare and Institutions Code (WIC) Section 15600 et seq.) 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. (Civil Code Section 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. (WIC Section 15610.30) Existing law requires a court to award to the plaintiff reasonable attorney's fees and costs, compensatory damages, and all remedies otherwise provided by law, where it is proven by a preponderance of the evidence that a defendant is liable for financial abuse under EADACPA. (WIC Section 15657.5(a)) 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. (Probate Code (PROB) Section 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, or has taken, concealed, or disposed of the property by the use of undue influence in bad faith or through the commission of elder or dependent adult financial abuse, the person shall be liable for twice the value of the property recovered. 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 Section 859) CONTINUED AB 381 Page 3 This bill provides that the person who has taken property, in bad faith, through undue influence, or through the commission of elder or dependent adult financial abuse, may, in the court's discretion, also be liable for reasonable attorney's fees and costs. This bill makes technical and conforming revisions to the above provision. Existing law provides that a principal can grant to an attorney-in-fact the authority to act on the principal's behalf regarding the principal's real or personal property. (PROB Section 4123) Existing law assigns various duties that the attorney-in-fact has to the principal. (PROB Section 4230 et seq.) Existing law provides that if the attorney-in-fact breaches a duty to the principal, the attorney-in-fact is chargeable with any of the following, as appropriate under the circumstances: Any loss or depreciation in value of the principal's property resulting from the breach of duty, with interest; Any profit made by the attorney-in-fact through the breach of duty, with interest; or Any profit that would have accrued to the principal if the loss of profit is the result of the breach of duty. (PROB Section 4231(a)) Existing law provides that if the attorney-in-fact has acted reasonably and in good faith under the circumstances as known to the attorney-in-fact, the court, in its discretion, may excuse the attorney-in-fact in whole or in part from liability if it would be equitable to do so. (PROB Section 4231(b)) Existing law 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, the person shall be liable for twice the value of the property recovered by an action to recover the property or for surcharge, in addition to any other remedies available in law. (PROB Section CONTINUED AB 381 Page 4 4231.5(c)) This bill additionally authorizes an award of double damages when a person has taken, concealed, or disposed of property that belongs to a principal under a power of attorney by the use of undue influence in bad faith or through the commission of elder or dependent adult financial abuse. This bill provides that a person who, in bad faith, through undue influence, or through the commission of elder or dependent adult financial abuse, has taken, concealed, or disposed of property that belongs to a principal under a power of attorney, the person may, in the court's discretion also be liable for reasonable attorney's fees and costs. 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), Chapter 49, Statutes of 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. In 2011, the Legislature enacted AB 354 (Silva, Chapter 55, Statutes of 2011), which extended the double damage award to actions against a person who 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. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 6/4/13) Conference of California Bar Associations (source) AFSCME California Advocates for Nursing Home Reform CONTINUED AB 381 Page 5 California Alliance for Retired Americans California Association for Health Services at Home California Commission on Aging California Long-Term Care Ombudsman Association California Police Chiefs Association, Inc. California Senior Legislature Consumer Attorneys of California Contra Costa County Advisory Council on Aging County Welfare Directors Association of California Law Offices of Steven Riess WISE & Health Aging Elder Abuse Prevention Program ARGUMENTS IN SUPPORT : According to the author: Financial abuse of vulnerable California citizens, particularly elders and dependent adults, has increased in recent years, and will almost certainly continue to do so as the financially strong Baby Boom generation continues to age. In 2011, the Legislature took one of several steps (AB 354, Chapter 55) to protect the elderly by specifying that Probate Code [Section] 859, which assesses double damages against persons who misappropriate the property of conservatees, wards, decedent's estates, and other vulnerable persons, also protected victims of elder financial abuse and bad faith undue influence. However, the 2011 legislation didn't make a similar change in the power of attorney law (Probate Code [Section] 4231.5), which also provides for double damages when an attorney-in-fact is found to have misappropriated the property of his principal. AB 381 corrects this oversight, ensuring that elders, dependent adults and victims of bad faith undue influence are also protected from bad faith misappropriation by attorneys-in-fact. In addition, there are many instances where the attorney's fees incurred seeking redress greatly exceed the remedy of double the value of the property misappropriated, and the rightful property owners have to decide whether they can afford the cost of seeking justice. The rightful property owners should not have to bear the burden of deciding whether they should attempt to recover property that is rightfully theirs because the attorney fees and costs might exceed the value of the property, and persons acting wrongfully and/or in bad faith should not benefit from their behavior because it is too costly for the wronged party to seek redress. AB 381 CONTINUED AB 381 Page 6 solves this problem by adding attorney's fees and costs to the award in successful cases to recover property that has been misappropriated. ASSEMBLY FLOOR : 77-0, 4/15/13 AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom, Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray, Grove, Hagman, Hall, Roger Hernández, Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Maienschein, Mansoor, Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone, Ting, Torres, Wagner, Waldron, Weber, Wieckowski, Wilk, Williams, Yamada, John A. Pérez NO VOTE RECORDED: Harkey, Lowenthal, Vacancy AL:k 6/4/13 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED