By KENNETH OFGANG, Staff Writer
The First District Court of Appeal Friday affirmed a judgment requiring several individuals, including an Oakland attorney, to pay more than $400,000 in damages and attorney fees to the conservator for an elderly disabled woman.
Div. Four upheld the award against Oakland attorney Carol Veres Reed, along with Ida McQueen’s sister and uncle, for misappropriation of funds from the unauthorized sale of property that McQueen’s father left her in trust.
McQueen, now 75 years old, suffers from physical and mental disabilities. Her father provided in his will that she could live in the family’s Oakland home for life. He also established a testamentary trust, giving the trustees discretion to use the principal for McQueen’s benefit during her lifetime, with the remainder of the assets to be divided among her surviving siblings after her death.
McQueen’s father died in 1990, and his two brothers were appointed to administer the estate. McQueen remained in the home until 2000, when she was taken to a nursing home due to medical complications.
While in the nursing facility, she was visited by Reed—who had handled her father’s estate, and whose father had prepared the will—and her brother, attorney Richard K. Veres. The two lawyers presented her with a power of attorney, naming her sister, Earline Drumgoole, to act on her behalf.
A witness later testified that McQueen told him that she did not understand who her visitors were or what they had her sign.
Unable to return to the home, which was apparently uninhabitable, she was later placed in a community care facility. Her uncle, Ray Blackshire, acting as trustee, sold the house in 2004 for $240,000, with the net proceeds being placed in Reed’s client trust account and later distributed among several family members, with a part of it going to Reed as the still-unpaid legal fees for handling the estate of McQueen’s father 10 years earlier.
In November 2004, the Regional Center for the East Bay, a public entity that assists the disabled, learned that the house had been sold without McQueen’s knowledge or consent, and that she had not received funds from the distribution. Legal proceedings were initiated, resulting in the appointment of a conservator for the limited purpose of bringing an action for elder abuse.
The conservator sued Reed, Drumgoole, Veres, Blackshire, and a nephew of McQueen’s. Alameda Superior Court Judge Jo-Lynne Lee ruled before trial that the testator’s intent was to create a life estate in the house for McQueen, and that her interest was not extinguished upon the sale.
The defendants claimed at trial that they had a good fait reasonable belief that the life estate had ended, and that McQueen could not have benefited from the sale of the home because there would have been a reduction or elimination of her SSI and Medi-Cal benefits.
The conservator disputed this, presenting expert testimony that the proceeds could have been protected through proper financial planning, although a rebuttal witness testified that would not have been possible during the relevant time frame.
The judge granted McQueen’s nephew a nonsuit, and the jury exonerated Veres. As to the remaining defendants, the jury found for the plaintiff on theories of conversion, breach of fiduciary duty, negligence, concealment, and—in Reed’s case—financial elder abuse and breach of fiduciary duty as an attorney, and awarded nearly $100,000 in compensation.
Lee awarded the conservator more than $320,000 in attorney fees against Reed under the elder abuse statute.
Presiding Justice Ignacio Ruvolo, in an unpublished portion of his opinion for the Court of Appeal, said Reed was properly found liable.
He rejected the argument that jurors held her to an erroneously higher standard of care because she was an attorney. The jurist said the argument was inconsistent with the jury instructions, and that defense counsel made no showing that jurors ignored the instructions.
Nor was it error, Ruvolo wrote, for the judge to instruct the jury as to the Rules of Professional Conduct. While the rules themselves do not create tort liability, the presiding justice explained, it was appropriate for Lee to read them to the jurors so that they could resolve a “potentially confusing” factual issue.
Reed, the presiding justice explained, testified that with respect to the power of attorney, she was acting as counsel for both Drumgoole and McQueen. It was therefore proper, Ruvolo said, for the judge to explicate the ethical requirements regarding representation of adverse interests and the duty to inform a client of significant developments.
In the published portion of the opinion, Ruvolo concluded that the judge was correct in instructing the jury to disregard McQueen’s government benefits in calculating damages.
This was a proper application of the collateral source rule, Ruvolo said, even though there appear to be no prior published cases on whether federal government benefits are a gratuitous source under the rule.
The case is Conservatorship of McQueen, A126825.
Chalk one up for the good guys!
Tuesday, January 18, 2011
By KENNETH OFGANG, Staff Writer