California Appellate Courts Doubly Divided Over Probate Code Section 859

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We blogged recently about Keading v. Keading (2021) 60 Cal.App.5th 1115, which addresses whether a trial court can impose damages under California Probate Code section 859, without a finding of bad faith, if the court finds that a person has taken, concealed or disposed of property by committing elder or dependent adult financial abuse.

There is another split of appellate authority as to the interpretation of section 859.  Last year, the Court of Appeal, in Estate of Ashlock (2020) 45 Cal.App.5th 1066, held that a prevailing party is entitled to double damages under section 859, in addition to the recovery of wrongfully transferred property, resulting in an aggregate award of triple the amount taken.  The court disagreed with Conservatorship of Ribal (2019) 31 Cal.App.5th 519, blogged about here, in which the court limited the aggregate award to double the amount taken.

We thus have two substantial disagreements over the interpretation of Probate Code section 859, leaving California probate judges to navigate two forks in the road.

Triple or Double Damages?

Estate of Ashlock arose from a dispute between Stacey Carlson and Gabriel Ashlock, both of whom claimed entitlement to the estate of Gabriel’s deceased father, Lonnie Ashlock.  The Stanislaus County Superior Court conducted an epic 53-day bench trial between November 2014 and February 2016.

Gabriel prevailed.  The trial court ruled that multiple parcels of real property, collectively valued at $5,148,000, belonged to Lonnie’s estate, and additionally imposed a penalty of $10,296,000 under section 859.  The court further surcharged Stacey in the amount of about $838,777 for misappropriating cash and personal property, and imposed a penalty of about $1,677,554.

On appeal, relying on Conservatorship of Ribal, Stacey argued that the trial court misinterpreted section 859 by awarding “triple” damages instead of “double damages.”

The Court of Appeal disagreed.  Interpreting the “plain meaning” of section 859, the court observed that “Section 859 does not impose punitive damages, but it is designed to punish and deter specific misconduct.”  The court found that a wrongdoer’s obligation to return property under Probate Code section 856 is separate from and antecedent to an award of double damages under section 859.

Although courts and lawyers usually refer to section 859 as the “double damages” statute, the Estate of Ashlock court explained that the net effect of sections 856 and 859 is that a prevailing party can recover thrice the value of the amount taken.

The court offered a hypothetical.  Assume that a “petitioner seeks to recover $10,000.  The money was withdrawn from the decedent’s bank account by the opposing party.  The probate court determines the decedent’s estate is entitled to the $10,000 and, pursuant to section 856, orders the opposing party to return it.  The opposing party is additionally found to have acted in bad faith.  Pursuant to section 859, the opposing party ‘shall be liable for twice the value of the property recovered,’ i.e., $20,000.  When the judgment is entered, it reflects a total monetary obligation of $30,000, but $10,000 of that sum is the ‘recovered’ amount.  The obligation to return the money arises under section 856; the liability under section 859 is a punishment for culpable misconduct.”

Two Statutory Interpretation Splits Need Clarification

Judges, lawyers and parties considering financial elder abuse claims thus face two open legal issues.  First, the Keading issue: whether “bad faith” must be proven in addition to financial elder abuse to recover damages under section 859.  Second, the Estate of Ashlock issue: whether damages awarded under section 859 are the same as, or double, the value of the recovered property.

From a policy standpoint, section 859 might benefit from flexibility.  Financial elder abuse cases often arise from murky facts and whether abuse occurred can be a close call.  Rather than requiring a trial court to impose additional damages of double the value of the property taken (if Estate of Ashlock is correct), judges might be given discretion to impose such damages up to double the value, depending on the circumstances of the case.

In any event, we can only hope that the two uncertain aspects of section 859 will be resolved soon so that there is a clearer path to follow.

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