Inheritance litigation is often the last battle in a war that’s been going on for a long time, especially in cases involving financial exploitation of the elderly. However, my experience is that all too often remedies designed specifically to attack this kind of pre-death wrongdoing get ignored by probate litigators (whose focus is usually on post-death claims). That may be changing.
I’ve previously written about recent efforts to beef up criminal prosecutions of elder financial exploitation in Florida (see here, here). But what about civil remedies for those crimes? Yup, we’ve got those too. They’re found in F.S. 415.1111, and they played a central role in a recent high profile case out of Tampa that resulted in a $34 million FINRA award against Morgan Stanley, as reported in Finra panel orders Morgan Stanley to pay $34 million to estate of former Home Shopping Network chief. Here’s an excerpt:
A Finra arbitration panel awarded more than $34 million to the estate of Roy M. Speer, the co-founder of the Home Shopping Network, in its claim against Morgan Stanley for churning Mr. Speer’s account.
The all-public arbitration panel ruled that Morgan Stanley, broker Ami Forte and branch manager Terry McCoy were jointly liable for unauthorized trading, breach of fiduciary duty/constructive fraud, negligence, negligent supervision and unjust enrichment.
The arbitrators also found that Morgan Stanley violated a Florida law against exploitation of vulnerable adults. It awarded $32.8 million in compensatory damages to Lynnda Speer, Mr. Speer’s widow and representative of the estate, as well as $1.5 million to reimburse costs incurred during the arbitration process, which spanned 13 months and involved 142 hearing sessions.
If you’re a probate litigator, you owe it to yourself and your clients to get to know F.S. 415.1111 (which explicitly authorizes punitive damages). And to do that you’ll want to start by reading an excellent article published by the attorneys on the winning side of the Speer case entitled Be Alert for Financial Exploitation of the Elderly. Here’s an excerpt:
Since the end of World War II, the greatest accumulation of wealth in the history of the world has been amassed in the U.S. We are now witnessing the greatest transfer of wealth ever encountered. Survivors of the greatest generation (those born in the 1920s and 1930s) will leave behind $12 trillion, and the baby boomers will transfer more than $30 trillion — all in the next two to three decades. Because much of this money will be transferred more than once, as the members of each generation die off, some estimates predict that over $60 trillion will be transferred over the next few decades.
This financial accumulation and wealth transfer is not limited to the oft-reported top 1 percent. Credible reports currently estimate the number of millionaires in the U.S. to be between 11 million and 15.6 million, with the number growing by about 400,000 per year. At the upper range of these extremes, nearly 6.5 percent of the U.S. population has achieved millionaire status. It is reasonable to assume nearly every practicing attorney in Florida has millionaire clients, and will face issues regarding the transfer of wealth from these clients to the next generation. The aging of many in this millionaire class creates a sea of opportunities for exploitation of the elderly by financial advisors, relatives, con-men and women, and outright thieves.
The irresistible lure of money has given rise not only to a sophisticated and legitimate industry of financial advisory services and tax planners, but also a nefarious underworld populated by various types of predators, some of whom may be affiliated with large, legitimate investment firms. There are several areas of financial vulnerability for older adults who are dealing with even moderate wealth. In addition to end-of-life medical expenses, the elderly are vulnerable to those who attempt to take their money by fraud or deceit, and by those who exert undue influence over the elderly person’s testamentary intent.
We can most certainly expect a continued increase in classic will contest cases. In addition, Florida lawyers will see an increase in the number of cases arising out of the pre-death financial exploitation of the elderly. Civil remedies under Florida’s Adult Protective Services statutes, codified in F.S. Ch. 415, can be an effective weapon in seeking redress for this exploitation. This article discusses some of the vulnerabilities of the elderly and potential civil legal remedies to financial exploitation.
But wait, there’s more!
After reading this post elder-law litigator extraordinaire Shannon Miller pointed out there are other — perhaps even more powerful — tools available for those fighting against financial exploitation of the elderly. I previously interviewed Shannon in connection with her work on the 2014 legislative revamp of F.S. 825.103, which criminalizes financial exploitation of the elderly (see here).
Shannon reminded me of F.S. 772.11, the civil flip side of F.S. 825.103. Under F.S. 772.11 you can sue a perpetrator for treble damages plus attorneys fees if there’s clear and convincing evidence that your client’s been injured in any fashion by reason of any violation of F.S. 825.103(1).
Shannon said litigators involved in these types of cases should also keep their eyes on CS/HB 1059, which is currently under consideration by the Florida legislature. Among other reforms, this bill would create a new cause of action authorizing immediate 15-day freeze orders of contested assets in elder abuse cases. Here’s an excerpt from the legislative staff analysis for the bill (which has yet to pass):
CS/HB 1059 creates a cause of action for an injunction for protection against the exploitation of a vulnerable adult. The bill defines the term “vulnerable adult” to have the same meaning as provided in the APSA, and defines the term “exploitation” to mean the same as it does under s. 825.103, F.S. The cause of action does not require that a party be represented by an attorney, nor is a party prohibited from filing an action if another cause of action is currently pending between the parties. The bill provides that a petition can be filed by any of the following individuals:
- A vulnerable adult in imminent danger of being exploited or their guardian;
- A person or organization acting on behalf of the vulnerable adult with the consent of that person or that person’s guardian; or
- A person who simultaneously files a petition for determination of incapacity and appointment of an emergency temporary guardian.
A person’s right to petition for an injunction is not affected by the fact that the person has left a residence or household to avoid exploitation of the vulnerable adult. Moreover, the petition may be filed in the circuit court in which the vulnerable adult resides.
In the event a guardianship proceeding is pending at the time of filing, then the petition must be filed in that proceeding. There is no minimum requirement of residency to petition, nor is there a requirement for actual exploitation to have occurred for an injunction to be issued.