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A recent EADACPA case Bush v.
Pulokas, which the law firm of Wilkinson & Wilkinson,
in Claremont, California tried before Los Angeles Superior
Court Judge, Robert Martinez, in the Pomona district, resulted
in an award of general damages prayed for in the amount of
$200,000, Attorney’s Fees and costs incurred in both the
lawsuit and the conservatorship and punitive damages in the
amount of $300,000.
The defendant was a longtime friend
and confidant of the family and the bookkeeper of the family
businesses. The husband and wife were married for 25+ years
and had executed a prenuptial agreement prior to their
marriage. This prenuptial agreement designated the family home
in Pasadena, California as the separate property of the wife.
It was the second marriage for both the husband and wife and
both had children from prior marriages. As the years passed
the husband and wife aged considerably and finally entered a
nursing home in 1991. From 1991 until 1998, the bookkeeper
assumed an ever larger role in the business and personal
finances of the Bush’s. Our law firm represented the
wife.
In May of 1996 the Pasadena home was sold for
approximately $500,000 in net proceeds which was wired into a
joint checking account of the husband and wife. The bookkeeper
coordinated the sale of this home with the real estate agent.
After the proceeds were deposited into a joint account in the
name of the husband and wife, the funds began dwindling
rapidly. One year later, our client, the wife, learned that
she was "running short of money" and she visited the bank with
her daughter and attorney to withdraw her separate property
funds and discovered that only $169,000 remained in her
account and that the remainder of her funds had been
transferred to "other" accounts to which she was not a
signator.
At that point in time, our law firm asked for
an accounting from the bookkeeper and the bookkeeper promptly
hired counsel. Our law office filed for a conservatorship over
the wife at her request and asked that her daughters be
appointed conservator over her. The husband battled to become
his wife’s conservator, but he was in such ill health and died
within a relatively short period of time, that the court
appointed the daughters.
Simultaneously, we filed a
lawsuit against the bookkeeper for conversion, financial elder
abuse and constructive trust on the funds from the Pasadena
house. We also hired a forensic accountant to trace the
proceeds into the various bank accounts.
At the time of
the trial both the husband and wife were deceased. Hence,
proving our case was accomplished entirely through the
forensic accountant. The problem we faced was the fact that
the husband was on all of the bank accounts and the bookkeeper
had merely had the husband sign all of the checks transferring
the separate property funds out of the joint bank account.
Hence, the defense was "the husband told me to move the funds. I was only
doing what I was told to do."
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This might have been a good
defense, but we traced some of the proceeds directly to cash
withdrawals by the defendant, and so we could prove that at
least some of the money had been used for the personal benefit
of the defendant.
However, it was the thorough research
of the law which led us to victory.
After our case in
chief the judge stated that he was considering granting the
motion for non-suit unless we submitted briefs which showed
that we were entitled to the relief we sought. Since we knew
at the outset that this would be a problem, we had thoroughly
briefed the legal issues of—separate property, transmutation
of separate property, agency/fiduciary duty, termination of
agency, attorney’s fees and punitive damages and the intent required under EADACPA. We also
attached a copy of the Welf. & Inst. Code Section 15610.30
to the Opposition for Motion for non-suit.
Once
the judge was clear that the defendant had an ongoing
fiduciary/agency relationship with the wife with regard to the
sale of the house and the proceeds, then the law provided that
the defendant could not accept orders from a second fiduciary
duty to the wife.
Once we thoroughly briefed the law,
the only issue remaining was the amount of the
damages.
What makes these fiduciary abuse cases so
difficult to prove is that our witnesses are deceased. The
attorney actually went to the bank with the wife to try to
retrieve the funds from her bank account. Hence, there was a
hearsay issue, with regard to whether or not the statements
made to the attorney out of court by the plaintiff were
admissible.
Again, after thorough briefing, these
statements were admissible to prove the plaintiff’s lack of
donative intent with regard to these separate property
funds.
In summary, for those attorneys who try these
types of cases, it is wise to hire a forensic accountant to
trace the funds, even though it is somewhat
costly.
Also, it is invaluable to thoroughly research
the law prior to trial and include the law in
your trial brief or under separate cover.
The rewarding
part was that all of the attorney’s fees, costs and punitive
damages were recovered and a constructive trust placed on
approximately $100,000 of the remaining funds which had been
frozen in the conservatorship
proceeding.
Patricia
Jo Wilkinson is an attorney with Wilkinson
and
Wilkinson, practicing law in
Claremont. |
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