Posts Tagged ‘Washington Supreme Court’

Conservator Has Authority Over Property In Another State

FEBRUARY 15, 2016 VOLUME 23 NUMBER 7

We live in an increasingly mobile world. That assertion is hardly controversial. The reality that America’s patchwork of over fifty separate legal jurisdictions can make for confusion and conflict is well understood by lawyers and observers. A recent guardianship and conservatorship case involving two states (neither of them Arizona) illustrates how that confusion can play out.

Ben Marvel (not his real name) bought a house in Spokane, Washington, in 2001. He let his daughter Melinda live there with her kids, and he stayed in the home from time to time — he also lived part time in Idaho. In about 2007, he moved in with his daughter and her family full-time.

At about that time, Melinda sued Ben for allegedly concealing her late mother’s will and failing to transfer her assets as directed by that will. As a result of that litigation, Ben agreed to transfer the Spokane house to Melinda; he signed a quit claim deed to her in mid-2007, and the lawsuit was dismissed a few months later. Melinda did not immediately record the quit claim deed.

Meanwhile, Ben’s son initiated a conservatorship proceeding in Idaho, and the Idaho court determined that Ben was an Idaho resident, that he lacked capacity to make his own financial decisions, and that a professional fiduciary should be appointed. Because Ben’s assets were limited, the Idaho conservator was directed to “facilitate” a reverse mortgage on his home in Spokane.

The reverse mortgage was signed in October, 2007, and the conservator received funds that helped pay for Ben’s care. Meanwhile, a few months later, the Washington court (where Melinda’s lawsuit had been dismissed) signed a new order and judgment confirming that Melinda owned the Spokane property; that judgment indicated that it would be nunc pro tunc — that is, that it would be effective as of the original date on which the lawsuit had been dismissed.

Ben died in 2011, and the reverse mortgage became due. The bank granting the reverse mortgage ultimately initiated foreclosure proceedings, and Melinda objected that the house was hers, that Ben did not own any interest in it, and that the Idaho courts had no jurisdiction to authorize a reverse mortgage over Washington property anyway.

To clarify this confusing story, this timeline might be helpful (we’ve added a sprinkling of dates not included in the above narrative):

  • 2001: Ben purchases Spokane house
  • Early 2007: Ben moves into Spokane house with Melinda’s family; Melinda sues Ben
  • June 28, 2007: Ben signs quit claim deed conveying house to Melinda
  • August 22, 2007: Washington court dismisses Melinda’s lawsuit
  • August 27, 2007: Idaho court initially appoints conservator for Ben
  • October 22, 2007: Idaho court directs conservator to facilitate reverse mortgage
  • October 25, 2007: Idaho conservator signs reverse mortgage documents
  • Early 2008: Washington court files judgment finding house belongs to Melinda, dates it for August 22, 2007
  • 2008: Idaho conservatorship terminated; Washington conservatorship takes over
  • March 12, 2011: Ben dies
  • December 8, 2011: Melinda finally records the quit claim deed signed by Ben in 2007
  • 2012: bank initiates foreclosure on reverse mortgage

There are several legal questions posed by this confused history. Can any individual secure a reverse mortgage (or a conventional mortgage, for that matter) on property that they no longer own? Can the failure to record a deed, coupled with the failure to get the court to enter a judgment, permit someone who doesn’t really own property to encumber it? Is there some explanation for everyone’s actions in this scenario? All are interesting questions. But the legal issue that catches our eye is this: can an Idaho conservatorship court make any findings affecting real estate in Washington?

In general terms, real estate is subject to the jurisdiction of the courts where the property sits, and not other courts. In Ben’s case, however, the bank argued that his Idaho conservator had the authority to handle all of his property and finances — regardless of where they might be located. Melinda, on the other hand, challenged the very power of the Idaho court to approve, direct, or even facilitate a reverse mortgage on out-of-state property.

The trial court in Washington decided that the reverse mortgage was valid, and that the bank could foreclose on the loan. The Washington Court of Appeals reversed, finding that “the Idaho court lacked authority to authorize a conservator to encumber the Spokane residence.”

The case went on up to the Washington Supreme Court, which agreed with the trial judge. The Idaho conservatorship proceedings, it decided, were entitled to “full faith and credit” under the U.S. Constitution, and the Idaho courts had considered and decided the question about whether Ben resided in Idaho or Washington at the time its proceedings were initiated.

The Washington high court also decided that, while the Idaho courts would not have had authority to change ownership of the real property in Washington, they could enter orders that indirectly affected ownership of that property. As an analogy, the justices noted that an Idaho court could enter an order in a divorce proceeding that directed one spouse to sign a deed to Washington property; the court’s power over the individual would permit it to affect the real estate in another state.

Once the state’s high court decided that the Idaho conservatorship orders were valid and enforceable, the problem became whether to find the mortgage itself to be valid. Since the deed conveying the property to her had not been recorded, the bank had no reason to ask her if she claimed some interest in the property. The bank’s reliance on the record ownership and the authority of the Idaho conservator was sufficient to find the mortgage to be valid. Onewest Bank, FSB v. Erickson, February 4, 2016.

Should a Guardian Follow the Wishes of Her Ward?

We read about an interesting Washington case recently.  Raven v. DSHS, a Washington Supreme Court decision handed down on July 18, 2013, indirectly dealt with a guardian’s duty to consider the known wishes of the subject of the guardianship. If the evidence is clear that the ward would not want to be institutionalized, for instance, is it elder abuse for the guardian to keep her ward at home past the time when the state’s Adult Protective Services workers think she should be placed in a nursing home?

It’s an interesting question, and more than just academic. You can read one analysis of the case, and the facts giving rise to the case, at the newsletter/blog of Washington lawyer John S. Palmer. We hope and expect to hear more from Mr. Palmer in the future.

Guardians’ Fees for Advocacy Work Disallowed by Court

DECEMBER 12, 2011 VOLUME 18 NUMBER 42
Last month we saw an interesting variation on fee requests for guardianship and conservatorship proceedings. A Washington State Supreme Court case dealt with the payment from wards’ estates to a professional fiduciary organization in unusual circumstances.

James R. Hardman and his mother Alice Hardman are certified professional guardians under Washington State’s guardianship regulation program. As in Arizona, the program is operated by the state Supreme Court, and requires testing, training and reporting to a court-operated agency. In addition, Washington professional guardians are required to report to the local probate judge once each year on the finances and welfare of each individual ward — just as all other guardians do.

The Hardmans are guardians of the person and the estate (in Arizona we would say guardians and conservators) of “more than 20” developmentally disabled adults residing at a state-run residential facility known as Fircrest School. They handle their wards’ finances, make health care decisions and determine the proper placement for each ward, and no allegations were raised that they do that work anything other than conscientiously and well. Because they are so deeply involved in the developmental disability community, they are also very active in advocacy efforts. They lobby state, local and federal agencies and elected officials and they vigorously oppose efforts to transfer Fircrest residents to residential placements that they believe provide inadequate care.

The Washington guardianship regulation scheme assumes that guardians like the Hardmans should be paid no more than $175/month from their wards’ funds for guardianship services. There is a mechanism for seeking more fees, however, when it is required because the ward has unusual issues. The regulation particularly describes the possibility of convoluted property transactions, interaction with criminal courts for a ward who has gotten into legal trouble, extensive or emergency medical services, or similar complications.

The Hardmans estimate that their advocacy work consumes 80-100 hours per month. They believe that it benefits all of their wards. They sought approval of not only the ordinary $175/month payment in each case, but an additional $150/month from each ward to compensate them for advocacy for the residents of Fircrest.

The effect of approving the higher fees would have a direct effect on the state programs for the developmentally disabled. Because reasonable guardians fees are deductible from a resident’s share of cost under Washington law (this varies from state to state, and would not be handled the same way in Arizona, for instance), the $150/month per ward would effectively reduce the total amount paid by residents to the state by as much as about $50,000 paid to the Hardmans.

Although the first judge hearing the matter agreed and allowed the Hardmans their higher fees in a single case, the next two times it was considered their request was denied. The case ended up before the state Supreme Court, which ruled that the Hardmans could not collect fees from their individual wards to fund their general advocacy work.

There are a number of problems, in the state high court’s view, with the Hardmans’ request. The actual amount requested, and the justification of the amount of time spent, was different in the two cases considered by the court. The direct benefit to individual wards was not clear to the Justices. The advocacy work might arguably benefit the class of guardianship wards, but the high court did not believe it was “necessary” to the actions of a guardian — a requirement of the state law governing fee requests.

One of the more intriguing ideas promoted by the Hardmans was that denial of their request would effectively deprive their wards of their constitutional rights to free speech and to petition the government for redress of grievances. Not so, ruled the Justices — they could still speak out through advocates provided to them by the system, and nothing prevented the Hardmans from continuing their own advocacy work. It was just not required that their guardians should be compensated for that advocacy — particularly since that would put the probate judge in each individual case in the untenable position of having to decide which “speech” would need to be protected and paid for. In the Matter of the Guardianship of Lamb, November 23, 2011.

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