BILL ANALYSIS Ó AB 381 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 381 (Chau) As Amended May 24, 2013 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |77-0 |(April 15, |SENATE: |36-0 |(July 1, 2013) | | | |2013) | | | | ----------------------------------------------------------------- Original Committee Reference: JUD. 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 reasonable attorney's fees and costs at the discretion of the court, except as otherwise provided by law. 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, may be liable for reasonable attorney's fees and costs at the discretion of the court, except as otherwise required by law. Specifies that the remedies provided by this provision shall be in addition to any other remedies available in law to a person authorized to bring an action pursuant to the Elder and Dependent Adult Civil Protection Act (EDACPA). 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, except as otherwise required by law may also be liable for reasonable attorney's fees and costs at the discretion of the court. The Senate amendments clarify that liability for attorney's fees AB 381 Page 2 shall be at the discretion of the court. EXISTING LAW : 1)Provides that a person found liable for taking, concealing, or disposing of property belonging to the estate of a decedent, 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. 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. 3)Establishes EDACPA to protect elderly and dependent adults from abuse, including financial abuse. 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. 5)Requires, when it is proven by a preponderance of the evidence that the defendant is liable for financial abuse of an elder or dependent adult, the court to award compensatory damages and attorney's fees and costs. FISCAL EFFECT : None 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 (Silva), 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 AB 381 Page 3 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 Bar Associations (CCBA) - 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 permit the court, in its discretion, to award 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. According to the sponsor, the 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 AB 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." The Executive Committee of the Trusts and 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 AB 381 Page 4 supports extending the double damages provided for in Probate Code 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 this bill 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 cases, 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. Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334 FN: 0001093