A Business And Real Estate Litigation Firm Serving California

Estate’s Personal Rep Can Sue Individually for Elder Abuse Where Rep is Also Beneficiary of Estate

On Behalf of | Jan 11, 2022 | Firm News |

The California Court of Appeal, Fourth District, recently held that an elder, who is both beneficiary and personal representative of a probate estate, has standing to bring a claim of financial elder abuse in her individual capacity based on allegations that her son and a lender wrongfully deprived her of property through a predatory loan transaction with the estate. The Court of Appeal reversed a trial court’s order sustaining demurrers to the elder’s financial elder abuse claim. In so ruling, the Court of Appeal held that special circumstances justify allowing the elder to maintain the cause of action in her own name, since the elder could not bring the claim as the estate’s personal representative and there was no third-party personal representative to sue.

A copy of the Court of Appeal’s opinion in Ring v. Harmon may be found here.

In Ring, the elder’s (“Elder”) daughter died and left her home to Elder. Elder’s son then initiated a probate proceeding and orchestrated Elder’s appointment as personal representative of daughter’s estate. Elder’s son and Lender then allegedly induced Elder to enter into a predatory loan with an 11% interest rate. The predatory loan also provided approximately $18,000 in fees and $41,894.24 in net loan proceeds which were deposited into an estate account. Elder’s son then allegedly withdrew the $41,894.24.

Elder sued Lender for financial elder abuse and other claims, individually and not as personal representative of the estate. Lender demurred and argued that Elder lacked standing to bring the claims individually since she entered into the predatory loan as the personal representative of her daughter’s estate. The trial court sustained Lender’s demurrers, finding that all the claims alleged were properly asserted only in Elder’s capacity as personal representative of her daughter’s estate. The trial court reasoned that Elder could bring all of her claims, including her claim for financial elder abuse, in her capacity as personal representative of her daughter’s estate.

As you may recall, financial elder abuse occurs when an elder is wrongfully “deprived of any property right, including by means of an agreement, donative transfer, or testamentary bequest, regardless of whether the property is held directly or by a representative of an elder …” A claim for financial elder abuse can be asserted not only against a person or entity who wrongfully deprived an elder of any property right, but also one who assisted another in doing so. (Welfare and Institutions Code, § 15610.30.)

Generally, an executor or other personal representative is the only person authorized to maintain or defend an action on behalf of a probate estate. There are limited circumstances where the beneficiary of the estate has standing to sue a third party to seek redress for an injury to the estate, such as to quiet title to property or where special circumstances exist.

On appeal, the Court of Appeal observed that there was no reason why Elder could not, in her capacity as personal administrator of her daughter’s estate, pursue most of the claims she had asserted, since only the estate was the borrower under the allegedly predatory loan. The Court of Appeal determined that the trial court had correctly dismissed most of Elder’s claims, since she brought them individually and not as representative of the estate.

However, the Court of Appeal found that Elder could maintain an action for financial elder abuse in her individual capacity. The Court of Appeal first noted that Elder could not sue for financial elder abuse in her capacity as the personal representative of her daughter’s estate, since such claims may only be asserted by the elder or the elder’s representative. Relatedly, where the beneficiary and the personal representative of the estate are the same person, neither the Probate Code’s surcharge provisions nor an independent suit for damages could provide the beneficiary any relief via a lawsuit against herself as personal representative.

The Court of Appeal then found Elder’s special circumstances justified allowing her to maintain an individual claim for financial elder abuse, since she could not bring her claim as the estate’s personal representative and since there was no third-party administrator who could be held responsible. The Court of Appeal held that where an elder is both beneficiary and personal representative of a probate estate, the elder has standing to bring a claim of financial elder abuse in his or her individual capacity based on allegations that the defendants wrongfully deprived him or her of property by means of a transaction with the estate.

Finally, the Court of Appeal rejected Lender’s argument that Elder had not been deprived of an individual property right. The Court of Appeal found that Elder had obtained a contingent right to possess and control the home upon her daughter’s death, albeit subject to the probate administration process. The Court of Appeal reasoned that Elder’s interest in the home as beneficiary constituted a sufficient property interest to support her claim for financial elder abuse.

This article intended to be for informational purposes only and is not intended to be treated as legal advice. You should not rely on or act on any information from this Website without consulting with a competent attorney licensed to practice law in your jurisdiction. Neither this Website nor use of the information from the Website creates an attorney-client relationship. This Website may contain links to other internet sites. These links are provided to assist you in searching for other resources or information that may be of interest to you and are not endorsements of any products or services. The owner of this site assumes no liability or responsibility for any errors or omissions in the content contained on this site.