On October 9, 2013, Governor Brown signed new legislation adding a new statutory definition of undue influence at California Welfare & Institutions Code §15610.70 and amending other related statutes. I have copied below at the end of this post the information and wording of the legislation from the following California legislative page: http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140AB140.

I haven’t been following this legislation. And as I haven’t read anything about the intended purpose of the legislation, why it was needed, or what improvement it is intended to accomplish, my below comments about the new law are uninfluenced based on the wording of the statutory changes and the current existing law on undue influence. I have been involved in mental capacity, fraud, and undue influence, and will and trust contest cases for most of my legal career. I also invite you to provide your comments about the new law.

MY THOUGHTS ON THE LEGISLATION

On my initial reading my first thoughts were that the new statutes for the most part primarily follow and codify existing law. And indeed many of the provisions do mirror existing case and common law, and new Probate Code §86 further specifies: “’Undue influence’” has the same meaning as defined in Section 15610.70 of the Welfare and Institutions Code. It is the intent of the Legislature that this section supplement the common law meaning of undue influence without superseding or interfering with the operation of that law.”

The primary changes occur in new California Welfare and Institutions Code §15610.70 which adds or codifies the statutory definition of undue influence, but, as stated at §86, does not supersede the common law meaning which still exists. You can read the actual wording of §15610.70 below yourself. My comments pertain to the changes which don’t necessarily mirror existing case and common law and the possible overall impact of the statue.

Initially, as §15610.70 now presents a statutory definition of undue influence, that definition will be easier to present to a jury as a standard of care. Consideration should also be given to whether there are per se violation possibilities and instructions. Those issues might need to be determined by future court decisions.

New Welfare and Institutions Code §15610.70(a) provides that the following primary issue areas will be considered when determining if there has been undue influence: (1) the vulnerability of the victim; (2) the influencer’s apparent authority; (3) the actions or tactics used by the influencer; (4) the equity of the result (however, §15610.70(b) provides that evidence of inequitable result alone without more is not sufficient to prove undue influence).

Most of the §15610.70(a)(1) criteria relating to the vulnerability of the victim already exist in current common law. I do note however that the statute includes the victim’s age and education as two of the possible criteria. I would not consider either age or education as evidence of undue influence without more. And I provide additional comments below about the “education” criteria.

I assume that the §15610.70(a)(2) criteria pertaining to the influencer’s apparent authority means the apparent authority that the accused influencer has or had from the victim’s perspective although that might be an issue for determination by future case decisions. I note that the statute includes as evidence of the apparent authority the accused influencer’s status as a fiduciary, family member, care provider, health care professional, legal professional, spiritual adviser, expert, or other qualification. Depending on your perspective, the statute might be viewed as in part pertaining to or targeting professionals and, of course, clergy. The statute doesn’t list CPAs/accountants, financial advisors, bankers or stockbrokers but it does include overflow “expert” and “other qualification” categories. Who, for example, is an “expert”?

Most of the §15610.70(a)(3) criteria relating to the actions or tactics of the accused influencer already exist in common law. I do note however one listed category of action or tactic: the accused influencer’s “claims of expertise” which again could be viewed as in part pertaining to or targeting professionals.

ADDITIONAL POSSIBLE UNCERTAINTIES

Under the statue can an accused influencer be found guilty or liable for undue influence if he or she had no intent to unduly influence and/or can the accused influencer be found guilty or liable for undue influence if he or she did not benefit or wrongfully intend for another person to benefit from the influence? So, for example, what about the situation of an estate planning attorney, a CPA/accountant, a financial advisor, a banker or a stockbroker, influencing a client to do something with the client’s money or assets, but not wrongfully intending or acting? Can the influence, e.g., advice, or even possible negligent advice or actions now possibly constitute undue influence? And if so, will those actions be covered by malpractice coverage without reservation of rights? More issues to be determined by further court decisions.

Dave Tate, Esq. (San Francisco)

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The following is copied and pasted from the California legislative link that I provided above.

Assembly Bill No. 140

CHAPTER 668

An act to add Section 86 to the Probate Code, and to amend Section 15610.30 of, and to add Section 15610.70 to, the Welfare and Institutions Code, relating to undue influence.

[ Approved by Governor October 09, 2013. Filed with Secretary of State October 09, 2013. ]

LEGISLATIVE COUNSEL’S DIGEST

AB 140, Dickinson. Undue influence.

Existing law provides that financial abuse of an elder or dependent adult occurs when, among other instances, a person or entity takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or dependent adult by undue influence, as defined.

Existing law makes failing to report, or impeding or inhibiting a report of, among other things, financial abuse of an elder or dependent adult, in violation of certain reporting requirements a misdemeanor. Existing law also makes it a misdemeanor for any caretaker of an elder or dependent adult to violate any provision of law proscribing theft or embezzlement, with respect to the property of that elder or dependent adult.

This bill would change the definition of undue influence to mean excessive persuasion that causes another person to act or refrain from acting by overcoming that person’s free will and results in inequity. The bill would require, in determining whether the result was produced by undue influence, the vulnerability of the victim, the influencer’s apparent authority, the actions or tactics used by the influencer, and the equity of the result to be considered. The bill would specify that an inequitable result, without more, is not sufficient to prove undue influence.

By changing the definition of a crime, this bill would impose a state-mandated local program.

Existing law prohibits the use of undue influence and establishes protections for individuals unable to resist undue influence in various areas of the law, including wills, trusts, and conservatorships.

This bill would define undue influence for those purposes without superseding or interfering with the common law of undue influence.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.

DIGEST KEY

Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES

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BILL TEXT

THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

SECTION 1.

Section 86 is added to the Probate Code, to read:

86.

“Undue influence” has the same meaning as defined in Section 15610.70 of the Welfare and Institutions Code. It is the intent of the Legislature that this section supplement the common law meaning of undue influence without superseding or interfering with the operation of that law.

SEC. 2.

Section 15610.30 of the Welfare and Institutions Code is amended to read:

15610.30.

(a) “Financial abuse” of an elder or dependent adult occurs when a person or entity does any of the following:

(1) Takes, secretes, appropriates, obtains, or retains real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both.

(2) Assists in taking, secreting, appropriating, obtaining, or retaining real or personal property of an elder or dependent adult for a wrongful use or with intent to defraud, or both.

(3) Takes, secretes, appropriates, obtains, or retains, or assists in taking, secreting, appropriating, obtaining, or retaining, real or personal property of an elder or dependent adult by undue influence, as defined in Section 15610.70.

(b) A person or entity shall be deemed to have taken, secreted, appropriated, obtained, or retained property for a wrongful use if, among other things, the person or entity takes, secretes, appropriates, obtains, or retains the property and the person or entity knew or should have known that this conduct is likely to be harmful to the elder or dependent adult.

(c) For purposes of this section, a person or entity takes, secretes, appropriates, obtains, or retains real or personal property when an elder or dependent adult is deprived of any property right, including by means of an agreement, donative transfer, or testamentary bequest, regardless of whether the property is held directly or by a representative of an elder or dependent adult.

(d) For purposes of this section, “representative” means a person or entity that is either of the following:

(1) A conservator, trustee, or other representative of the estate of an elder or dependent adult.

(2) An attorney-in-fact of an elder or dependent adult who acts within the authority of the power of attorney.

SEC. 3.

Section 15610.70 is added to the Welfare and Institutions Code, to read:

15610.70.

(a) “Undue influence” means excessive persuasion that causes another person to act or refrain from acting by overcoming that person’s free will and results in inequity. In determining whether a result was produced by undue influence, all of the following shall be considered:

(1) The vulnerability of the victim. Evidence of vulnerability may include, but is not limited to, incapacity, illness, disability, injury, age, education, impaired cognitive function, emotional distress, isolation, or dependency, and whether the influencer knew or should have known of the alleged victim’s vulnerability.

(2) The influencer’s apparent authority. Evidence of apparent authority may include, but is not limited to, status as a fiduciary, family member, care provider, health care professional, legal professional, spiritual adviser, expert, or other qualification.

(3) The actions or tactics used by the influencer. Evidence of actions or tactics used may include, but is not limited to, all of the following:

(A) Controlling necessaries of life, medication, the victim’s interactions with others, access to information, or sleep.

(B) Use of affection, intimidation, or coercion.

(C) Initiation of changes in personal or property rights, use of haste or secrecy in effecting those changes, effecting changes at inappropriate times and places, and claims of expertise in effecting changes.

(4) The equity of the result. Evidence of the equity of the result may include, but is not limited to, the economic consequences to the victim, any divergence from the victim’s prior intent or course of conduct or dealing, the relationship of the value conveyed to the value of any services or consideration received, or the appropriateness of the change in light of the length and nature of the relationship.

(b) Evidence of an inequitable result, without more, is not sufficient to prove undue influence.

SEC. 4.

No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.

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