DECEMBER 6, 1999 VOLUME 7, NUMBER 23
In 1998, Gertrude Hoener signed a bank card giving Ronald Hoener power of attorney over her accounts at People’s Bank of Pratt, Kansas. By the time she died in 1995, he had written checks to himself for $140,000 and had liquidated over $250,000 in certificates of deposit held in her name.
When she signed the bank’s signature card, Mrs. Hoener also instructed the bank to send her monthly statements in care of Mr. Hoener. That fact became critically important in the subsequent litigation. Mrs. Hoener’s daughter (and executrix) argued that the bank had failed in its duty to keep Mrs. Hoener informed of the status of her account; the bank, on the other hand, argued that it had complied with the instructions given to it by a fully competent customer, and insisted that it had no obligation to look behind the customer’s motivations.
Apparently Mrs. Hoener first learned that she was running out of money about two years before she died. At that point she considered authorizing the sale of some property to pay for her care (she was by then residing in a nursing home), but it is not clear whether she thought that Mr. Hoener was taking advantage of her. In any event, the Kansas Court of Appeals later ruled, she had a duty to investigate the status of her affairs at that point, and her daughter could not make the claim on behalf of her estate years later.
After Mrs. Hoener’s death, her daughter brought suit against the bank for its alleged involvement in the dissipation of Mrs. Hoener’s estate. When the bank insisted its only obligation was to deliver statements to its customers, Mrs. Hoener’s daughter argued that bank employees had actual knowledge of the alleged financial exploitation, and therefore should have taken extra steps. The trial court disagreed, and granted the bank’s motion to dismiss the lawsuit.
On appeal, the Kansas Court of Appeals agreed that dismissal was proper. The appellate judges noted that the bank’s only duty was to send statements to the address directed by its customer, and that if there was any additional duty it was too late to bring the lawsuit more than two years after Mrs. Hoener herself should have realized something was amiss. Henrichs v. Hoener, Sept. 29, 1999.
In Arizona, the result likely would have been the same. Arizona law does require tax preparers and others to report financial exploitation of vulnerable adults, but the language is not broad enough to include bank officials. Like Kansas, Arizona requires a bank customer to make any complaint about handling of an account within a short period of time after statements have been mailed. Even if there was evidence the bank was aware of mismanagement, any lawsuit would have to be filed within that time.