Financial Elder Abuse Law - Clarification of Scope

As indicated in my previous blogs on the subject, financial elder abuse is rampant in this country. A recent post by the National Adult Protective Services Association indicates that one in twenty older adults have suffered some sort of perceived financial mistreatment in the recent past and that only one in forty-four cases is ever reported.

In Bounds v. Superior Court (2014) 229 Cal. App. 4th 468 the Court provided guidance on when there has been “financial abuse” under the Act.

The case has a rather convoluted factual history. Ms. Bounds was an eighty-eight year old widow suffering from Alzheimer’s disease. Her trust, of which she was a trustee, owned and operated a family business, Bounds Ltd. which owned a large piece of real property.

Her property adjoined that of Kopykake Enterprises which was owned by Jerry Mayer. Because Bounds Ltd. was suffering financial problems Ms. Bounds began talking to Mayer and Joseph Sojka, a commercial realtor representing Mayer. (Hereinafter collectively referred to as “Mayer”).

The parties began negotiating the sale of her property. Her family members learned of the negotiations and managed to talk her out of that sale.

Thereafter Ms. Bounds’ mental condition continued to deteriorate and in January 2013 Mayer persuaded Bounds to execute a four page letter of intent to sell the property to Mayer. This agreement was negotiated by Sojka who knew that the sales price was significantly below market value. Bounds’ family again learned of the agreement between Bounds and Mayer and, through counsel, cancelled the escrow. Kopykake then filed an action for specific performance of the contract of sale and the trust of Bounds filed a cross-complaint alleging a number of causes of action including financial elder abuse.

The Elder Abuse Act broadly defines financial elder abuse as occurring “when a person or entity…takes, secretes, appropriates, obtains or retains real or personal property of an elder…for a wrongful use or with intent to defraud, or both.” Subsection C of Section 15610.30 explains that “for purposes of this section, the person or entity takes real or personal property when an deprived on any property right, including by means of an agreement…regardless of whether the property is held directly or by a representative of an elder.”

Bounds argued that the open escrow instructions and Mayer’s claim that there was a valid purchase agreement prevented her from selling the property. Mayer argued that merely entering into escrow instructions was not a “taking” within the terms of the statute because no transfer of title had occurred.

The Court disagreed. As the Court indicated, the statute applies to not only consummated transfers but to prospective transfers. The Court also stated that an actual physical taking or change of ownership is not required as long as there was interference with the ability of the elder to sell or otherwise transfer their property.

The decision of the Bounds Court is in line with a number of other decisions that have broadly interpreted the Financial Elder Abuse statute. Use of this statute and the Court’s willingness to give it a broad interpretation will help in the protection of elders who have had their property interfered with, even if a physical “taking” never occurred.

If you or an elderly loved one has been taken advantage of financially please give us a call. Janssen Malloy LLP has been able to assist a number of persons under the Financial Elder Abuse Act and we may be able to help you.