Posts Tagged ‘Alabama Supreme Court’

Transfer of Guardianship to New State Should Be Easy

DECEMBER 9, 2013 VOLUME 20 NUMBER 46

We have written before about transferring a guardianship or conservatorship to Arizona, or out of Arizona, when the subject of the proceeding moves to another state. In fact, Arizona has joined a number of other states (that number, incidentally, currently stands at 37 states, plus the District of Columbia and Puerto Rico) in adopting something called the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act — the UAGPPJA. A mouthful of a title, but a simple goal: it should be easy and inexpensive to move your Arizona guardianship to Arkansas, or to Alaska, if you and your ward move to one of those states.

One key element of the UAGPPJA’s efficiency goal involves each state’s courts giving up a little tiny slice of control. Guardianship and conservatorship proceedings are often tightly controlled by local judges, and for good reason. But the logic of the UAGPPJA says that when the local judge in another state has decided whether a guardian or conservator is needed, and who should be appointed, the local judge in the new jurisdiction should be able to take that determination at face value. That means no expensive proceeding to evaluate the proposed guardian and conservator, no additional imposition of costly proceedings or even appointment of investigators, medical examiners and attorneys — unless there is good reason to suspect that something is amiss.

That’s the theory, but the devil, as usual, is in the details. A recent Alabama case may be the first appellate court decision to address how the UAGPPJA should work, and that state’s Supreme Court comes down squarely on the side of efficiency and ease of administration.

Roberta Smith (not her real name) filed a guardianship and conservatorship proceeding regarding her mother Susan in 2010. Both Roberta and Susan lived in Kentucky at the time, and so she appropriately filed her petition in Kentucky courts. After notice was given and a hearing held pursuant to Kentucky’s normal appointment process, Roberta was appointed as her mother’s guardian and conservator.

Roberta then moved to Alabama, and took her mother with her. She wanted to transfer the guardianship to their new state, and it should have been easy — both states had adopted the UAGPPJA. The process requires several steps, but it is mostly clerical in nature. First Roberta had to get the Kentucky court’s permission to initiate the transfer, then get the Alabama court’s permission to make the transfer, then go back to Kentucky to show that the Alabama proceeding was underway, then once more back to the Alabama courts to accept final transfer. The UAGPPJA intends that the result would then be that Alabama had jurisdiction over the guardianship and conservatorship, and Kentucky could close its file on the matter.

But the Alabama probate judge had a different idea. He wanted to make sure Roberta was a suitable guardian and conservator, and that she was making decisions properly. So he appointed a guardian ad litem (a GAL, in lawyer lingo — which is not a comment on the appointee’s gender) to investigate and to represent Susan’s interests in the transfer proceeding. Months later the GAL reported that, while Roberta hadn’t done anything wrong, she thought the public guardian would be a better choice to make decisions for Susan. The probate judge agreed and appointed a new guardian and conservator.

Roberta appealed, arguing that the UAGPPJA was supposed to allow transfer of proceedings, not relitigation of issues already decided. Meanwhile, as an aside, the public guardian recommended that the GAL could be appointed as guardian for Susan, and the probate court went along — turning Susan’s lawyer into her decision-maker for health care and placement decisions, and raising more questions about the Alabama proceedings.

The Alabama Supreme Court looked over this record, reversed the probate judge and sent the entire matter back for entry of an order transferring the Kentucky proceedings to Alabama. The UAGPPJA does not permit the receiving court (Alabama, in this case) to make a new determination about who ought to be guardian and conservator, but only to transfer the existing guardianship and conservatorship. Of course, once the transfer is completed the new court has jurisdiction, and could review the actions of the guardian and conservator, direct her to handle things differently and even remove her and appoint a new person — but that would be a separate proceeding. Sears v. Hampton, November 22, 2013.

The Alabama case, though it deals with an issue near and dear to our lawyers’ hearts, will probably not have a large impact on guardianship and conservatorship across the country. But it does reflect a change in the way the world works. Twenty years ago it was relatively rare to see a guardian or conservator move — with the ward — to a new state, and the law was unsettled about how to handle such a switch. Most of the time the guardian/conservator would be required to file a new petition in the new state, incur significant legal expenses and hope to get appointed. Once appointed, they could go back to the original state, show the new state’s appointment, and ask to have the first state’s file closed.

But each state probate judge might have a different idea about who should act, what they should do, and what were reasonable decisions. There was the regular concern that the two courts might enter conflicting orders, or that the first state’s judge might object to the second state proceeding even being initiated, or that the second state’s judge might refuse to act while the first state still had jurisdiction. Our society grows more mobile every year, and these problems become more complicated. The UAGPPJA was intended to help simplify this process, and now it has — at least in Alabama. We would like to think that it will also simplify things in Arizona, Arkansas, Alaska and all the states that don’t even start with “A”.

For extra credit: is this the first appellate decision to interpret the UAGPPJA? It could be. In Hetman v. Schwade, a concurring justice in one of the other “A” states (Arkansas) strongly suggested that his state’s legislature should adopt the UAGPPJA — and they took him up on the suggestion two years later. The Tennessee Court of Appeals, in a July 13, 2013, decision (In re Proposed Conservatorship of Stratton), makes a passing reference to the UAGPPJA — but only to note that the appellant failed to preserve any argument she might have under the Act. So we think this Alabama case is in fact the first appellate interpretation of the Act.

“Joint Control Agreement” Leads to Lawyer’s Liability

JUNE 15, 2009  VOLUME 16, NUMBER 44

Tranquilino Ventura was a child when his father died, and just fourteen years old when a lawsuit arising from his father’s death was settled. The total settlement, after costs and fees, exceeded $500,000. When Mr. Ventura turned eighteen he found out that the money was all gone.

Mr. Ventura’s mother, Patricia Dutton, had been appointed conservator by an Alabama probate judge. The judge had ordered that she post a $620,000 bond to secure her proper management of the money, and then given her authority to handle her son’s lawsuit proceeds. Over the next four years she apparently managed to lose much of it in poor stock investments.

There were other questionable uses of the money. Ms. Dutton bought her son a BMW automobile for his sixteenth birthday, and paid for polo lessons and a polo pony. She also loaned $120,000 of her son’s money to her parents, who lost those funds in several schemes involving auto and mobile home sales.

After Mr. Ventura discovered that his money was gone, he brought suit against a number of individuals and organizations. He sued Hartford Insurance, who had issued the bond assuring that his mother would manage the money properly. He also sued the lawyer who had represented his mother, Billie B. Line, Jr., and two brokerage houses that had each handled a portion of the conservatorship money.

Mr. Ventura’s case has made its way to the Alabama Supreme Court twice in the seven years since he reached his majority. The first case, Edward D. Jones & Co. v. Ventura, was decided in 2005. It stands for the proposition that the mandatory arbitration agreements contained in almost all brokerage new account forms can bind the ward even though signed by a conservator. But the more interesting case was decided just last month.

Mr. Ventura secured a $500,000 judgment, plus interest, against his mother, and sought to collect the money from Hartford Insurance, which had (after all) promised to pay off on any claims against the conservator. Hartford, however, wanted to raise another argument. It had gotten Ms. Dutton’s lawyer (Mr. Line) to sign a “joint control agreement,” in which Mr. Line agreed to personally oversee Ms. Dutton’s management of the money — and to sign every conservatorship check that might be issued.

Joint control agreements are popular among bonding companies, and less so among lawyers. The idea is that, since the attorney has some responsibility to monitor the estate anyway, the bonding company can leverage that responsibility into more protection on its bond. It may be hard to see how this works to the lawyer’s benefit, but some insurance agents even hold the joint control agreement out as a boon to lawyers.

Whether or not it was a smart decision for Mr. Line to agree to the joint responsibility, he did. By his signature he actually became an agent of Hartford Insurance. So what did he do next? Mr. Line then signed a number (somewhere between 50 and 150 — the testimony was unclear) blank checks for Ms. Dutton, and let her take over management of the money.

Mr. Line’s failure to monitor the conservatorship went further than that, however. He borrowed $5,000 from Mr. Ventura’s assets himself to make a down payment on a house in Reno, Nevada. Later he and Ms. Dutton would agree that could be a part of his fees, along with another $4,000 he received from the estate.

Although the probate judge had ordered Ms. Dutton to post an additional $120,000 bond, Mr. Line never saw to it that the extra bond was posted. When the judge scheduled an accounting two years into the conservatorship, Mr. Line failed to get it filed and instead asked for dismissal of the guardian ad litem, the attorney who had been appointed to represent Mr. Ventura’s interests. The probate judge declined to grant his request, but Mr. Line later testified that he did not get the judge’s order, and he never prepared an accounting or appeared for the hearing scheduled in the probate court.

Before trial Mr. Ventura settled with Hartford Insurance on the claim against the bond issued to Ms. Dutton, and that meant the trial proceeded with Hartford moved from the “defendant” category to “plaintiff.” Testimony at the trial indicated that Mr. Ventura’s estate should have been worth in excess of $920,000, even if some of Ms. Dutton’s expenditures had been approved.

The jury awarded $200,000 in actual damages against Mr. Line, and another $550,000 in punitive damages. The Alabama Supreme Court ruled that Mr. Line had undertaken a fiduciary relationship not only with his client, Ms. Dutton, but also with Hartford Insurance and with Mr. Ventura. In these facts, and given the magnitude of Mr. Ventura’s loss, the court had no trouble upholding the judgment. Line v. Ventura, May 22, 2009.

Footnote: on February 8, 2008, Mr. Line filed a Chapter 7 bankruptcy petition. It is not yet clear whether Mr. Ventura or Hartford Insurance will receive all or any significant portion of their judgment.

What can we glean from the story of Mr. Ventura, Ms. Dutton, Mr. Line and Hartford Insurance? Several points:

  • If a lawyer is willing to sign a “joint control agreement,” he or she should do so with eyes wide open  and the lawyer needs to treat the agreement seriously and actually monitor his or her client’s actions
  • In any case, agreement or no agreement, a lawyer who ignores his client’s failure to handle conservatorship funds subjects himself or herself to personal liability for that failure
  • If there is any question about the ability of a family member — even a trusted and loved family member — to handle fiduciary responsibility, it is better for the ward, for the bonding company, for the court and ultimately for the lawyer if a professional fiduciary is selected instead.
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