Appellate ruling clarifies standing to bring elder abuse claim

The Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst. Code Section 15600 et seq.) was enacted to protect an elder who is wrongfully "deprived of any property right, including by means of an agreement, donative transfer, or testamentary bequest, regardless of whether the property is held directly or by a representative of an elder." Section 15610.30(c). What if (i) the elder is both the beneficiary and personal representative of the decedent's estate; and (ii) the estate is still in the process of administration, so the property has not yet been distributed to the elder? Does the elder have "any property right" cognizable under Section 15610.30(c)?

In Ring v. Harmon, 2021 DJDAR 12739 (Dec. 15, 2021), the 2nd District Court of Appeal reviewed a lower court decision it characterized as "unusual." Eighty-year-old Awana Ring was the beneficiary of her late daughter's estate. The primary asset was a home worth approximately $400,000, subject to a $110,000 mortgage. The deceased daughter's son and grandson, working with a mortgage broker, initiated a probate proceeding that resulted in Ring's appointment as personal representative. Ring filed a lawsuit alleging that she had been personally damaged by them convincing her to take out a loan on predatory terms and which was secured by the house. Unsurprisingly, the son, grandson and broker were said to have enjoyed the loan proceeds by immediately withdrawing the money from the estate's account upon being deposited.

Ring filed a complaint against the son, grandson and broker. She alleged nine causes of action in her individual capacity: (1) predatory Lending; (2) breach of fiduciary duty; (3) rescission or reformation; (4) constructive fraud; (5) elder abuse (financial); (6) Business and Professions Code Section 10240 et seq. (relating to real property loans); (7) Business and Professions Code Section 17200 et seq. (relating to fraudulent business acts); (8) breach of implied covenants; and (9) civil conspiracy/aiding and abetting. The trial court sustained the defendants' demurrer to her complaint, with leave to amend, because it felt those claims could only be pursued in her representative capacity. Rather than filing an amended complaint, Ring then brought an appeal as to the sustaining of the demurrer to the first eight counts.

Since this was the appeal of a demurrer, the appellate court had to presume the complaint stated the strongest case possible and to assume all facts pleaded were true. It had to determine only whether Ring stated a cause of action. Of the eight counts on which she appealed, the court agreed with the lower court that Ring did not have standing as an individual to pursue seven of the counts, but held that she did have standing to bring a claim of financial elder abuse in her individual capacity even while serving as personal representative of the estate. That was fine for Ring, as she was able to pursue the other claims in her capacity as personal representative of the estate in the underlying probate proceeding.

The appellate court first indicated the trial court was mistaken to suggest Ring could pursue the financial elder abuse claim in her capacity as personal representative of the estate. It then pointed out that, since she was both a beneficiary and the appointed personal representative, there was no relief in a suit for damages under the Probate Code's surcharge provisions nor an independent suit for damages against the representative. She could not bring an action against herself for damages caused by the actions of the defendants, but she could bring an action on her own behalf as an individual beneficiary.

The defendants argued Ring lacked a "property right" under Section 15610.30(c) as to the house because, even though the house was left to her in her daughter's will, she did not hold the property directly in her individual capacity; nor was it held by her representative, e.g., a conservator, trustee or attorney-in-fact. The court said the property that must be held by Ring is not the house, but an interest in the house, which passed to her immediately upon her daughter's death. In other words, her interest in the house was a separate property right that held value even before the estate administration ended. Citing prior case law, the court reasoned that the fact the house was still being administered as part of a probate estate, whether held by Ring as personal representative or somebody else, "does not change the analysis regarding her rights in her individual capacity."

The court then reviewed the language of the Elder Abuse and Dependent Adult Civil Protection Act, which defines financial abuse as occurring whenever an elder is wrongfully "deprived of any property right," and about which it has been held that "[w]here there is room for debate regarding the meaning of the statutory text of the Act, it should be 'liberally construed on behalf of the class of persons it is designed to protect,' and in a manner compatible with its 'overall remedial purpose'."

In conclusion, the court again confirmed what the California Legislature stated when it passed the act, that standing should be interpreted as broadly as possible for the purpose of protecting elders and dependent adults. In this instance, specifically holding that, where an elder is both the beneficiary a personal representative of a probate estate, he or she has standing to bring a claim of financial elder abuse in his or her individual capacity based on allegations the defendants wrongfully deprived him or her of property by means of a transaction with the estate. 