Courts recognize broad protections for elder or dependent adult financial abuse

Financial abuse of elders and dependent adults continues to grow in sophistication. The 4th District Court of Appeal recently recognized that the breadth of the Elder and Dependent Adult Civil Protection Act anticipates sweeping protection of elders and dependent adults, even against complex schemes of fraud.

In Munoz v. PL Hotel Group, LLC, 2022 DJDAR 160 (Jan. 3, 2022), the plaintiff -- an 80-year-old man who was not proficient in reading English -- claimed that a father-and-son team defrauded him out of millions of dollars through a complex real estate transaction and the substitution of documents after approval. In short, the plaintiff claimed that after agreeing to the terms to purchase a hotel and a lease, the defendants substituted a final version for execution that materially differed from the original contract, but in a way that would be difficult to detect. The plaintiff also alleged that the defendants engaged a loan broker to place the loan with an alter ego of the defendants without informing plaintiff. As with the purchase and lease documents, the plaintiff alleged that the defendants substituted new loan documents for execution, surreptitiously increasing the interest rate and securing the loan with additional property belonging to the plaintiff.

When the plaintiff learned of these changes -- months after he executed the documents -- he brought suit against the defendants for, among other things, fraud and financial elder abuse. The trial court sustained a demurrer to these claims, dismissing them.

With respect to the claim for financial elder abuse, the trial court held that the plaintiff failed to state a claim for financial elder abuse because he "failed to sufficiently allege the essential element of 'wrongful use'" of the fraudulently obtained funds by the defendants.

The Court of Appeal reversed, recognizing the broad scope of actions that can constitute financial elder abuse under the statute: "under subdivision (a) of this statute, an actionable taking is one involving either a 'wrongful use' or done 'with the intent to defraud, or both.'" Because plaintiff alleged that defendants obtained the funds through their scheme of fraudulently substituting documents and engaging a loan broker to foist an unfavorable loan on plaintiff, and plaintiff is over 65 years old, he properly alleged a claim for financial elder abuse.

The court's decision in Munoz is consistent with other, recent decisions by the Courts of Appeal demonstrating the strength of the Elder and Dependent Adult Civil Protection Act. Earlier in 2021, the 1st District Court of Appeal confirmed that a party that prevails in a claim for financial elder abuse is entitled to statutory double damages under Probate Code Section 859 without a separate showing of bad faith. Keading v. Keading, 60 Cal. App. 5th 1115, 1130 (2021). These cases are also consistent with the overarching purpose of the statute: to protect this vulnerable portion of our population from abuse, and provide tools "to enable interested persons to engage attorneys to take up the cause of abused elderly persons and dependent adults." Welf. & Inst. Code Section 15600. 