California appeals court finds disabled woman’s family violated trust

From Westlaw News:

A California appeals court has upheld a jury’s finding that a mentally retarded woman’s uncle, sister and attorney violated a trust by selling the family residence without her knowledge and cutting her out of the proceeds.

The trial judge properly allowed jurors to consider Ida McQueen’s conversion claim and issued correct jury instructions on the standard for financial elder abuse, the 1st District Court of Appeal said.

McQueen, 76, suffers from mild mental retardation and is wheelchair-bound and unable to read or write, according to the opinion.

Her father established an estate trust for her care as part of his 1989 will, prior to his death. The will gave McQueen the right to live in the family home and directed the trustee, McQueen’s uncle Ray Blackshire, to pay for her care and expenses out of the trust principal.

In 2000 McQueen moved into a skilled nursing facility because of medical complications. The family’s attorney, Carol Veres Reed, visited her at the facility and had her sign a form that gave power of attorney to McQueen’s sister Earline Drumgoole, the opinion says.

Drumgoole, Reed and Blackshire later sold the family residence without McQueen’s consent or knowledge, and Reed distributed the proceeds among various family members, excluding her, according to the suit.

A court later appointed Fesha Taye as McQueen’s conservator after a regional social services agency learned that McQueen’s home had been sold without her knowledge, the opinion says.

Taye filed suit on McQueen’s behalf against Drumgoole, Reed, Blackshire and others, alleging financial elder abuse, fraud, concealment, conversion, breach of fiduciary duty and negligence.

She claimed the defendants breached the terms of McQueen’s trust by fraudulently executing documents to transfer the sale of the house and converting the cash proceeds for their own use.

A jury in the Alameda County Superior Court ultimately found Drumgoole, Blackshire and Reed each liable for conversion, breach of fiduciary duty and concealment. The jury also determined that Reed was liable for financial elder abuse and breach of fiduciary duty as an attorney.

The court ordered the defendants to pay McQueen $99,900 in compensatory damages and directed Reed to pay $321,000 in attorney fees and costs for her elder-abuse liability.

Drumgoole, Blackshire and Reed argued on appeal that the trial court should not have allowed the jury to consider a cause of action for conversion. The proceeds from the sale of a family home cannot form the basis of a conversion claim, they said.

The Court of Appeal said McQueen had a right to the proceeds of the sale under the life estate trust. Noting a pretrial ruling that McQueen’s father intended her to hold interest in the family home for the duration of her life, the three-judge panel said the defendants were obligated to use the proceeds for McQueen’s benefit.

The appeals court also rejected Reed’s claims of prejudicial error in her conviction for financial elder abuse.

She argued that the jury held her to a higher standard because she is an attorney and that the court put “overly strict” limitations on her defense testimony to that charge.

The instructions asked the jurors to consider whether it would be obvious to an attorney, not a “reasonable person,” that McQueen had a right to the property, the appeals court said.

Jurors also heard evidence that Reed took responsibility for deciding how the proceeds of the house sale would be distributed and her testimony that she believed McQueen’s life estate had terminated prior to the sale, the court said.

McQueen v. Drumgoole et al., No. A126825, 2011 WL 117653 (Cal. Ct. App., 1st Dist. Jan. 14, 2011).