When an elderly person has been exploited by professionals and family members with whom they thought they had a caring relationship, their quality of life is often significantly affected. The elderly need protection from financial exploitation. The Maine Supreme Court has set forth the standard for determining when a confidential relationship arises in situations other than under the improvident transfer statute.
Readers of this column will know I believe the tort system is the protector of society. Plaintiffs’ lawyers have the unique opportunity to protect those who most need help as part of their career objectives. I have written about recognizing remedies that are available to minorities, the disabled, victimized spouses and small children.
Another group that requires protection by the tort system is the elderly. Recent census data establishes that there are more than 31 million men and women 65 years or older who need to be protected from financial exploitation.
Improvident Transfer of Title Act
Every lawyer should be aware of the Improvident Transfer of Title Act which presumes that if there is a transfer of real estate or a major transfer of personal property for less than full consideration by an elderly person to someone who has a confidential or fiduciary relationship with that person, there is undue influence. A mere close relationship is not sufficient to impose fiduciary duty. It must be demonstrated that the elderly person placed confidence and trust in the other. …/…
If one can establish a confidential or fiduciary relationship between an elderly person and an advisor, the advisor then owed the elderly person a duty of both loyalty and utmost good faith. An intentional or negligent breach of this duty can support claims of breach of contract, negligence, malpractice, infliction of emotional distress and fraud. In addition to asking for actual damages, the lawyer should also seek disgorgement of fees.
II. The Maine Supreme Court
The Maine Supreme Court has set forth the standard for determining when a confidential relationship arises in situations other than under the improvident transfer statute:
In a legal sense, confidential relationships are deemed to arise whenever two persons come into such a relation that confidence is necessarily reposed by one and the influence which naturally grows out of that confidence is possessed by the other and this confidence is abused or the influence is exerted to obtain an advantage at the expense of the confiding party. The salient elements of the confidential relation are the actual placing of trust and confidence in fact by one party in another and a great disparity of position and influence between the parties to the relation. …/…
The benefit to the wrongdoer may be direct, as in the receipt of property; it may be indirect, as through transfers to third persons or through the payment of inappropriate fees.
If a fiduciary such as a lawyer or an accountant, representing an elderly person provides advice and services for the sale of property to a third party and that transaction is objectively commercially unreasonable, there is liability. The advisors may not have been duly diligent, they may have misrepresented the proposed commercial transaction, or they may have been financially compensated in a commercially unreasonable manner.
Difficulties Representing the Elderly
Representing the elderly can be difficult. Your client may not always remember significant events, discussions, or other details. Often in these kinds of cases you are forced to rely upon documents and possible admissions made by the defendant. However, if you can establish the existence of a fiduciary relationship, an objective analysis may be sufficient without your client’s testimony. In these cases, expert witnesses are often required on the issues of whether a transaction was commercially reasonable and whether a particular fee was appropriate.
Given the speed of the dockets in state courts, it may be to the elder client’s advantage, if they are to have the benefit of any recovery, to file a motion to expedite the case. Although cases brought under the Maine Human Rights Act are statutorily required to be advanced on the docket, there is no such requirement for the elderly. …/…
Most judges, however, will recognize the need for a prompt trial in such cases.
Keep in mind that different standards may be applicable to different theories of a case. In addition, notice pleading may not be sufficient. You must consider all of the theories that might exist such as fraud, breach of fiduciary obligation, breach of contract, negligence, infliction of emotional distress, fee disgorgement, constructive or resulting trust, and punitive damages. In addition, your complaint must clearly allege the facts underlying the relationship between your client and the defendant so as to meet the specific legal standard for a fiduciary or confidential relationship. If more than one professional advisor was working for your client, you have a basis of a conspiracy claim.
III. Establishing Fraud
To establish fraud, a preponderance of the evidence is not sufficient. You must prove the following elements by clear and convincing evidence: a false representation of a material fact, with knowledge of its falsity, or a reckless regard of whether it is true or false, for the purpose of inducing your client to act or to refrain from acting, reasonable reliance upon the representation and action upon the representation to the client’s detriment. Non-disclosure may constitute fraud where the defendant had a duty to disclose material facts.
If you are representing an elderly person you may find a particular lawyer or accountant acted unethically in her capacity as an agent. Agency is defined by the Restatement as the “fiduciary relation which results from the manifestation of consent by one person to another, that the other shall act on his behalf and subject to his control and consent by the other so to act.” …/…
In considering your theories of recovery and drafting your pleadings, it is necessary to keep in mind that you need to be able to recover if you win. Defendants in these kinds of cases often have assets so that the source or recovery is not an important issue. On the other hand, you should be aware of the general limitations found in most malpractice policies. Professional policies will not generally cover for so-called business matters as opposed to professional matters. In addition, they often do not cover for criminal wrongdoing.
A cliche has it that getting old is a most unpleasant experience, but the alternative is much worse. When an elderly person has been exploited by professionals and family members with whom they thought they had a caring relationship, their quality of life is often significantly affected. The victim may feel that she has outlived her time. It is distressing, at the end of your life, to have to litigate against friends, family members or close advisors.
For these reasons, the exploited older person desperately needs you to give objective, clear-headed advice and analysis. He needs vigorous independent advice and help and it is our duty as professionals to give that help.