The powerful undue-influence presumption in litigating financial elder-abuse cases
It is no secret that the Baby Boomer generation is reaching seniority, and that life expectancies are longer today than they have ever been. With a larger elderly population and a longer lifespan, elder law has become a burgeoning area for practitioners. In 1982, the California Legislature passed the Elder Abuse and Dependent Adult Civil Protection Act (EADACPA) to address growing concerns of elder dependence on family and caretakers. In a world in which it is common for the elderly to add children and other trusted persons to bank accounts and on title to houses, elders are in a legally and financially vulnerable position. Misplaced trust and reliance can have a major impact on families and lead to various legal issues, namely financial elder abuse and undue influence. Through a case study, this article will demonstrate the power of the presumption of undue influence and the impact this presumption can have on elder-abuse lawsuits.
Meeting the client
Our client, a 79-year-old woman named Mary Smith,1 came to us when she learned that she had been removed from title to her house. Mary had gone to the county recorder’s office to add her children to the deed on her home, and discovered that she was not the record owner. The house was in the name of her daughter, the defendant, who was the youngest of Mary’s five children and Mary’s longtime caretaker. Reviewing the chain of title revealed that defendant daughter had added herself onto title as a co-owner, and then a number of years later removed Mary entirely. Mary had worked three jobs to afford this house and raised five children there, including defendant daughter. As the matriarch of her large family, everyone met at Mary’s house. Most importantly, the house was Mary’s only asset aside from her modest retirement, and Mary had ongoing medical expenses.
Our minds quickly turned to thoughts of financial elder abuse and undue influence. Financial elder abuse is defined broadly in California Welfare and Institutions Code section 15610.30.2 A person is liable for financial elder abuse under the law if he or she takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both, or by undue influence as defined in section 15610.70 or assists in doing any of these acts.
Welfare & Institutions Code section 15610.70 defines undue influence as “excessive persuasion that causes another person to act or refrain from acting by overcoming that person’s free will and results in inequity.”3 To determine if an elder’s free will has been overcome improperly, section 15610.70(a)(1)-(4) lists a number of factors for the factfinder to consider:
Vulnerability of the victim: age, education, impaired cognitive function, emotional distress, dependency, and whether the influencer knew or should have known of the vulnerability;
Influencer’s apparent authority: fiduciary or confidential relationship, family member, care provider, health care professional, legal professional, spiritual adviser, or any other kind of expert;
Actions or tactics used: controlling necessaries of life, medication, interactions with others, or access to information or sleep; use of affection, intimidation, or coercion; or initiation of changes in personal or property rights, use of haste or secrecy in effecting those changes, effecting changes at inappropriate times and places, or claims of expertise in effecting changes; and
The equity of the result: economic consequences to the elder, divergence from elder’s prior intent or course of conduct or dealing, relationship of the value conveyed to the value of any services or consideration received, or the appropriateness of the change in light of the length and nature of the relationship.
Rather than relying on Civil Code section 1575, which defines undue influence as “the use, by one in whom a confidence is reposed by another, or who holds a real or apparent authority over him, of such confidence or authority for the purpose of obtaining an unfair advantage over him,” section 15610.70 codifies much of the case law discussing section 1575. The factors outlined above are considered part of the statutory scheme aimed at protecting elders from abuse.
It was apparent immediately that Mary was a textbook example of a plaintiff who would be vulnerable to undue influence. She is of advanced age, has a third grade education, cannot read or write English, and had depended and relied on defendant daughter for help for several years.
Defendant daughter had both apparent and actual authority over Mary as she had been on Mary’s bank accounts, was Mary’s caretaker, had been designated as a decision maker for Mary’s healthcare decisions, and routinely helped Mary fill out paperwork and handle business affairs because of Mary’s limited education and language skills.
Defendant daughter had initiated the change in ownership on the house through two deed transactions. Defendant daughter had added herself to the home initially, and then removed Mary altogether a few years later. Mary had no recollection of the initial deed transaction, other than she recalled defendant daughter being added because she believed she needed to do so if defendant daughter was going to help her. Mary believed that adding defendant daughter onto title to her home was like adding defendant daughter to her bank account – it would still belong to Mary, but defendant daughter was there to assist her, not to take over ownership or complete control. The only thing Mary recalled from the later transaction was defendant daughter told her to get in the car, and that they were going to the County recorder’s office to fill out some paperwork. Defendant daughter placed a paper in front of Mary and told her to sign it. Mary felt intimidated by defendant daughter’s forceful tone, but trusted that the document was something that would benefit Mary, as defendant daughter had always helped her with forms and filling out paperwork. The result was devastating. When Mary wanted to create an estate plan, she learned for the first time that she did not own the home that she had worked three jobs to pay for and had raised her family in. The home was her only major asset. We felt confident that we would be able to prove all of the factors of undue influence to show financial elder abuse at trial, should we need to.
Presumption of undue influence
While Mary had the facts necessary to prove all the factors of undue influence outlined above, there is a more efficient way for a plaintiff to meet her burden of proof. The second way to prove undue influence requires a plaintiff to clear a lower evidentiary hurdle. This method of proving undue influence has the benefit of allowing an elderly plaintiff, such as Mary, to establish fewer factors and once she does, it then shifts the burden of proof to the defendant to show that the transaction or taking of property at issue was not abusive. This is a huge advantage in a legal landscape where the plaintiff almost always has the burden of proof and few options exist to shift the burden.
The presumption arises to shift the burden of proof required Mary to prove two things: (1) a fiduciary or confidential relationship between the parties;4 and (2) that the transaction was not to Mary’s benefit. To prove the existence of a fiduciary or confidential relationship, a plaintiff must show that the elder placed trust and confidence in the integrity and fidelity of the defendant. (Wolf v. Superior Court (2003) 107 Cal.App.4th 25, 29-30) Familial relationship and control over the property of another are two of the most important factors in establishing a fiduciary or confidential relationship. (Johnson v. Clark (1936) 7 Cal.2d 529, 534; Vai v. Bank of America Nat’l Trust & Sav. Assoc. (1961) 56 Cal.2d 329, 338.) If you can prove a fiduciary or confidential relationship and that the transaction was not beneficial to the elder, the law presumes that the property was taken through undue influence, and the burden shifts to the defendant to rebut the presumption.
In Mary’s case, she had the facts to prove a fiduciary and/or confidential relationship. Defendant daughter was listed on Mary’s bank accounts, paid Mary’s bills, and helped Mary fill out paperwork. In terms of medical care, defendant daughter drove Mary to medical appointments, refilled her prescriptions, and was listed as a decision maker and responsible party on Mary’s health-care forms. The second prong was easier to prove; it is not hard to convince a jury that two transactions that deprived an 80-year-old woman of her only asset were not beneficial to her.
Use jury verdict forms to your advantage
The case law on what the defendant must prove to rebut the presumption is voluminous and varying. In reading dozens of cases and analyzing what the court considers in determining if the presumption has been rebutted or not, three themes become clear. To rebut the presumption of undue influence, defendant daughter had to prove three things by a preponderance of the evidence: (1) the conduct or transaction was fair, (2) free from undue influence, and (3) with full comprehension of the results. (Myrick v. Bruetsch (1936) 13 Cal.App.2d 219, 224; Cox v. Schnerr (1916) 172 Cal. 371, 379; Sparks v. Sparks (1950) 101 Cal.App.2d 129, 135-136.) An important consideration in this analysis is whether or not the plaintiff had independent advice before the transaction. (Ibid.) If the defendant fails to prove any of the three factors, the presumption remains in place and the transaction is canceled because of the undue influence.
Because we met our burden of proof, the burden shifted to defendant daughter to prove the three parts and overcome the presumption. She was unable to do so.
To maximize our chances of a plaintiff’s verdict, we asked the jury to make a separate finding on each of the three elements on the verdict forms. Since our case had two different deed transfers at issue, a jury finding that one of these factors was not met would mean that defendant daughter did not rebut the presumption of undue influence as to that transaction and the deed would be voidable.
Defendant daughter argued that the test to rebut the presumption was disjunctive – that if the jury found any one of the three factors had been rebutted, there was no undue influence and she should retain the home. Defendant daughter’s argument fails both under the case law and on policy grounds. If rebutting only one factor were all the law required, the presumption would not shift the burden at all. A transaction can be fair, but done without full comprehension of the elder. For the presumption to offer the protection intended, all three factors must be rebutted for a transaction to be valid.
The jury found that defendant daughter had not met her burden as to one transaction, and that the other was fair, but it was not free from undue influence or done with full comprehension with the results. Both deeds were canceled and the home was returned to Mary. In talking with jurors after the case, we learned that they only found that one transaction was fair because Mary had retained a half ownership in the home when defendant daughter added herself on to title, and not because Mary had intended the results of the transaction. They wanted the home returned to Mary and believed Mary only added defendant daughter because of defendant daughter’s influence over Mary.
To safeguard a population that often suffers from confusion or memory loss, the law applies a presumption of undue influence upon a plaintiff’s showing of a fiduciary or confidential relationship and an unfavorable transaction. This presumption is a powerful weapon in financial elder-abuse litigation, particularly when your client has limited or no memory of the events in question or you are unsure that you can prove all the factors listed in section 15610.70.
The policy considerations behind the financial elder-abuse statutes are compelling and universal. Protection of our vulnerable elders is a concern that transcends culture or class. Children, caretakers, and fiduciaries have a legal responsibility to ensure that the elderly are informed, educated on their personal and business affairs, and in a stronger position to rebut the presumption of undue influence.
Utilizing the undue influence presumption shifts the burden of proof to the defendant to prove that the transaction in question was not abusive. A failure to prove any of the three factors results in a plaintiff’s verdict and victory for your elderly client. To maximize the breadth of the presumption, make sure the jury verdict forms seek a separate finding for each of the factors the defendant must prove: fairness, absence of undue influence, and with full comprehension. By asking the jury to think about each factor separately, you triple your chances that the defendant has not met his or her burden of proof.
Rebecca Diel is a trial attorney at Parish Guy Castillo. She began her career with the firm shortly after graduating from law school in 2014. She is admitted to practice in all California state courts and the United States District Court for the Eastern District of California.
Erin Guy Castillo is an experienced trial lawyer, handling exclusively civil trials and appeals in a wide variety of matters, including business disputes, real estate, probate and trust litigation, personal injury and property damage. Representing large companies to small businesses and individuals, she has served as lead trial counsel in several jury and court trials, including prosecuting cases to verdict or settlement reaching more than a million dollars. She has also successfully defended clients at trial and on appeal. Erin is admitted to practice in all California state courts and the United States District Court for the Eastern District of California.
2023 by the author.
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