New Case Law Shows Teeth in Uniform Power of Attorney Act for Breach of Agent’s Duties

 

Irish Arches

In an opinion published 11/7/13, the Colorado Court of Appeals ruled on substantial questions relating to the Uniform Power of Attorney Act (UPOA) as it relates to an agent’s duties and the types of activities which a power of attorney (POA) authorizes.  In People v. Stell, 2013CA0492,   the Court of Appeals reversed and remanded with directions a case involving a criminal indictment of an agent who was acting under a POA.  This decision has wide and beneficial implications for principals who have executed  POAs and whose agent are acting in their own self-interests,  are converting their principal’s assets for the agent’s use or otherwise stealing from them.  Here’s a sketch of the factual background of the case. Thanks to Vicki H. for sharing this case with me!

The principal (referred to as “victim” in the opinion) executed a POA in 2009 in Virginia.  Both Virginia and Colorado have adopted the UPOA so, even though the statutory cites vary, the law is substantially the same.  In the POA, the Principal named as agent his son, the defendant Stell.  While acting as agent under the POA, Stell wasted no time liquidating all of principal’s bank accounts, CDs, a 401K account, a piece of real property and the timber sold from that land – to the tune of $453,928.81.  The following year, Stell proposed that the principal place other assets into a trust so they would be protected from creditors.  The trust document that principal signed at his agent Stell’s direction did not name the principal as beneficiary of such trust and so, principal was permanently deprived of the use and benefit of that property.  In October 2010, principal terminated the POA and asked the Denver District Attorney’s office to investigate.  As a result of such investigation a nine-count indictment was drawn, eight counts for theft and one count of conspiracy.  The appeal of the trial court’s ruling is based on the dismissal of counts 1, 2, 4 and part of 3 – relating to the authority of the agent Stell to transfer principal’s property as agent under the POA.  In its dismissal of those counts, the trial court ruled that because the agent Stell had authority under the POA to do anything with the principal’s property that principal could do with it, that Stell couldn’t commit theft against his principal.  The Court of Appeals soundly rejected this line of thinking.

The POA is a document that confers broad powers, but it is no license to steal.  In this criminal case, the Court of Appeals examined carefully the fiduciary duty owed by an agent to his principal under the UPOA.  Citing a Virginia Supreme Court decision, the Court of Appeals stated that “powers of attorney are strictly construed.”  (Opin. at para. 17) Going further, the court ruled that the expansive language in a POA should be interpreted narrowly and should be construed in light of the surrounding circumstances.  It soundly rejected the argument that, because a POA typically gives a broad grant of authority, it could somehow give an agent the authority to misbehave, commit theft and otherwise breach fiduciary duties owed as a consequence of the nature of the principal-agent relationship.

The fact that a POA contains a broad grant of agent authority does not mean that an agent is nonetheless duty-bound (as in an agent’s fiduciary duty, as described in the UPOA) to exercise authority in acting as agent in the utmost good faith, loyalty, and other duties owed.  The Court of Appeals rejected that trial court’s reasoning that a broad grant of authority to the agent implied that an agent’s actions that were in violation of the fiduciary duties owed were somehow still “authorized” because agent was acting under a POA.  In paragraph 21 of the decision, the Court of Appeals identified the factual questions appropriate for a jury’s determination of whether an agent under a POA was acting within or outside of his or her scope of authority as determined by agent’s fiduciary duties.  They included the following questions of whether agent acted: (1) in accordance with principal’s reasonable expectations and consistently with the principal’s interests and intent; (2) in good faith; (3) loyally for the principal’s benefit; and (4) with the care, competence and diligence ordinarily exercised by agents in similar circumstances.  In reversing and remanding the counts of the indictment dismissed by the trial court, the Court of Appeals gives an indication that the days of the POA as a “license to steal” for noncriminal law purposes are over.  This is an important development for Colorado – for both the new mandatory reporting of financial exploitation law(read my post about that law here ) as well as the ability of exploited elders and other at-risk persons to recover funds  improperly taken from them by an agent under  a POA.  It gives more protection for principals who have been taken advantage of by their agents to establish that the agent’s conduct was improper and to strengthen the ability to recover such funds that were improperly used or converted for the agent’s exclusive benefit.

©Barbara Cashman 2013     www.DenverElderLaw.org

Colorado’s New Law on Mandatory Reporting of Abuse or Exploitation of Elders

 

An Irish Bridge

Like every other state in our nation, the population of Colorado is getting older.  Longevity and independence can have a price for some of us, and there are many people in our population who are elders and are at risk of exploitation and abuse.

Gov. Hickenlooper signed this act into law on May 16, 2013.  It makes Colorado the 48th state to have such legislation in place. Click here  to read the Act.   Prior to this law, there was no mandatory reporting of elder abuse.  Elder abuse, as defined by the statute, includes physical and emotional abuse as well as financial exploitation.  The new law will provide additional protections to at-risk elders.

So here’s a bit of background:  In 1991, Colorado enacted the Adult Protective Services (APS) system, which is designed to protect vulnerable or at-risk adults who, because of age or mental or physical ability, are unable to obtain services or otherwise protect their own health, safety, and welfare. Under current law, an “at-risk adult” is any person over the age of 18 who meets these criteria.  Prior to Colorado’s new mandatory reporting  law, members of certain helping professions were encouraged to make reports of known or suspected abuse and provides a telephone hotline for all citizens. Among its many provisions, this bill creates a new class of protections for “at-risk elders,” who are defined as any person age 70 or older. The law also makes a number of changes to the APS system.

So – how does it work? Starting July 1, 2014, members of helping professions listed in the statute as “mandatory reporters” are required to report known or suspected abuse of at-risk elders.  (You can read a follow-up post about mandatory reporters here.)  The report must be made within twenty-four hours and the penalty for not reporting is a class 3 misdemeanor.   A person who files a report in good faith is immune from civil or criminal prosecution.

Here’s a brief Q&A on this new law…

What else does this new law provide?

The bill also makes applicable existing penalties for theft-related crimes, caretaker neglect, and making a false report for offenses against at-risk elders.

What about changes in how law enforcement handles these matters?

Law enforcement agencies are required to complete a criminal investigation when appropriate and to provide a summary of investigation reports to the relevant county department of social services and district attorney.

How about training for law enforcement personnel?

The Peace Officer Standards Training (P.O.S.T.) Board in the Department of Law is required to develop and implement a training curriculum no later than January 1, 2014. Training is to assist peace officers in recognizing and responding to incidents of known or suspected abuse and exploitation of at-risk elders. On and after January 1, 2015, local law enforcement agencies are required to employ at least one officer that has completed the new P.O.S.T. training. The board is authorized to charge a fee to participants for the training.

And how will the mandatory reporting be implemented?

The Colorado Department of Human Services  (something about APS and county) is directed to implement, beginning  January 1, 2014, a program to raise awareness among both public and the mandatory reported about mistreatment, exploitation and self-neglect among at-risk adults, including at-risk elders.

What about the work that county departments of social services (typically through APS) have been doing so far with their investigations?

County departments of social services are mandated under Section 26-3.1-103, C.R.S., to investigate all reports of abuse, exploitation, or neglect of at-risk adults. Reports are evaluated and investigated according to the rules established by DHS. DHS rules currently classify responses as a referral, no response needed, urgent and requiring follow up, requiring a response within 24 hours or requiring a response within 3 days, followed by appropriate services as needed. Services can range from assisting persons with obtaining public benefits and providing case management to seeking emergency placements and guardianship of the at-risk adult.

Colorado data shows that in FY 2011-12, a total of 11,000 new reports were filed. Of this number, 4,733, or 43 percent, required an investigation. In addition, a total of 1,750 investigations were carried forward from the prior fiscal year. Overall, cases requiring investigation have increased by an average of 2 percent per year.  You can read more important information about the new law here .

I will be blogging more about the topic of financial exploitation of elders, as I have previously.  It will be interesting to see how the approach of law enforcement agencies toward the financial exploitation of Colorado elders will change with this new law – with the reporting requirements as well as with the training that law enforcement will get.  I am optimistic that this law will help soften the bright line distinction that many law enforcement agencies have drawn between what constitutes exploitation which warrants criminal investigation and prosecution and that which is otherwise civil in nature, meaning that the victim must undertake his or her own civil remedies.

©Barbara Cashman 2013     www.DenverElderLaw.org