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State v. Estate of Jean R.

Supreme Court of Alaska

April 22, 2016

STATE OF ALASKA, OFFICE OF PUBLIC ADVOCACY, OFFICE OF ELDER FRAUD & ASSISTANCE, Appellant and Cross-Appellee,
v.
ESTATE OF JEAN R., Deceased, and SIDNEY F., Appellees and Cross-Appellants

          Appeal from the Superior Court of the State of Alaska, First Judicial District, Juneau, Philip M. Pallenberg, Judge. Superior Court No. 1JU-12-00179 PR.

         Ruth Botstein and Dario Borghesan, Assistant Attorneys General, Anchorage, and Michael C. Geraghty, Attorney General, Juneau, for Appellant/Cross-Appellee.

         Robert S. Spitzfaden, Gruening & Spitzfaden, APC, Juneau, for Appellees/Cross-Appellants.

         Deborah A. Holbrook, Juneau, Co-Counsel for Appellee/Cross-Appellant Sidney F.

         Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and Bolger, Justices.

          OPINION

         FABE, Chief Justice.

         I. INTRODUCTION

         The State Office of Public Advocacy (OPA) filed a petition for an ex parte protective order on behalf of an elderly woman against her adult daughter and caregiver, after receiving allegations of financial abuse made by the elderly woman's other family members. The superior court found those allegations to be unfounded and denied the protective order. The elderly woman's other daughter had previously initiated a conservatorship proceeding, in which the State then participated -- in support of the conservatorship -- after the denial of the protective order. Ultimately the conservatorship case was settled through mediation. The elderly woman's estate and the caregiver daughter sought attorney's fees against the State in connection with both the protective order and conservatorship proceedings.

         The superior court awarded full reasonable fees arising from the denial of the protective order, finding that OPA's protective order petition was brought without " just cause," under the fee-shifting provision of AS 13.26.131(d). The superior court declined to award attorney's fees arising from the proceeding to establish a conservatorship because the State had not " initiated" the conservatorship proceeding as required for fees under AS 13.26.131(d). The State appeals the first award, and the caregiver daughter and the estate of the woman, who is now deceased, cross-appeal the denial of the second award.

         But we conclude that AS 13.26.131 does not apply to elder fraud protective order proceedings; nor does Alaska Civil Rule 82 apply. Instead, AS 44.21.415 sets up a cost-recovery mechanism that does not allow private parties to recover attorney's fees against the State in such proceedings. So we vacate the superior court's fee award in the elder fraud protective order proceeding. And because the State did not initiate the conservatorship proceeding here, no attorney's fees are available against the State in that proceeding. We therefore affirm the superior court's denial of fees in connection with the conservatorship proceeding.

         II. FACTS AND PROCEEDINGS

         When this case first arose in 2012, 92-year-old Jean R.[1] lived in Juneau with her 55-year-old daughter Sidney F., who served as her caregiver. Sidney had moved from Anchorage to Juneau in 2004 to care for her mother and father. In 2009 her parents requested that Sidney quit her job to provide full-time care, and Sidney did so in April 2010. Later that year Jean was diagnosed with dementia, and in October 2010 Jean's husband (Sidney's father) died. Sidney continued to live with her mother full time, providing care and holding a power of attorney authorizing her to manage all of Jean's personal affairs. This case arises out of allegations about Sidney's expenditures raised by two of Jean's other children, Shelley and Geoffrey, who lived outside of Alaska.

         In July 2012 Shelley petitioned to establish a conservatorship for her mother, alleging that Sidney was wasting and dissipating Jean's money and assets without benefit to Jean, and that Sidney was financially exploiting Jean. Shelley sought " a third party to serve as a full guardian with the powers of a conservator to protect the rights and well-being of [Jean]." Through this action the Office of Elder Fraud and Assistance, a section of OPA, learned of Shelley's allegations about Sidney's conduct.

         In August 2012 OPA filed an ex parte petition for an elder fraud protective order under AS 13.26.207-.208 to protect Jean from alleged financial abuse by Sidney. Prior to filing the petition, OPA examined Jean's bank records and other financial documents, which largely correlated with the allegations made by Shelley. OPA also interviewed Shelley and Geoffrey. But OPA evidently did not interview Sidney or Jean, even though it knew that they were both already aware of the allegations of fraud because similar allegations had been made in Shelley's conservatorship petition.

         In its petition OPA asserted that ownership of Jean's home had been transferred to Sidney; that Jean's bank accounts had been overdrawn by $2,623 between January and August of 2012; that large expenditures had been made for the sole benefit of Sidney, including airline tickets to Seattle and Minnesota, supplies used to repair a trailer for Sidney's boyfriend, and veterinarian bills for Sidney's pet; and that Sidney had generated " inordinately high" grocery bills. OPA estimated the value at risk to be $54,000 per year and declared the risk to be " immediate or urgent," citing recent overdrafts and checks made out to Sidney from Jean's bank account totaling $1,500. OPA requested that the court limit Sidney's powers of attorney to medical decisions; that housing decisions be shared between Sidney, Shelley, and Geoffrey; and that a temporary six-month conservatorship be established to handle all financial matters following the initial 20-day ex parte protective period.

         Jean received a copy of OPA's protective order petition the day after it was filed, and she quickly filed a brief opposing the petition.[2] She explained that the home had been deeded to Sidney in order to help secure additional government assistance for Jean in her old age. She also " dispute[d] the factual basis" of the allegations relating to the airplane tickets, trailer repair, and veterinarian bills. She maintained that she was " well taken care of" and that no financial abuse had taken place.

         The superior court denied the ex parte petition three days after it was filed. The court briefly explained that it reached this decision because it " d[id] not find that there ha[d] been a showing of probable cause" demonstrating that an ex parte order was necessary to prevent fraud by Sidney against Jean. But the superior court indicated that it would convert OPA's ex parte petition into a petition for a six-month protective order under AS 13.26.208.[3] So OPA continued to proceed with this petition for a six-month protective order, even after the court's denial of the ex parte petition.

         The superior court consolidated OPA's ongoing protective order petition and the earlier conservatorship petition filed by Shelley, and it scheduled an evidentiary hearing in September 2012. At that hearing, the court heard testimony that the home was transferred on advice of counsel; that the alleged flight to Minnesota by Sidney and her boyfriend was in fact a trip to Juneau that Shelley took to help care for Jean; that Sidney had reimbursed money to her mother's account for a flight she had taken to Seattle to obtain medical treatment; and that the money spent on Sidney's boyfriend's trailer was actually compensation in exchange for re-roofing and painting Jean's house. The court also heard testimony from Sidney explaining that the money she spent and the checks she drew from Jean's account were compensation under an agreement reached between Sidney and her parents before Sidney quit her job and became their full-time caregiver.

         At the end of the hearing, the superior court entered an oral order denying OPA's petition for an elder fraud protective order. The court credited Jean's and Sidney's explanations for the expenditures OPA had challenged, explaining that it found Jean's and Sidney's testimony more credible than the testimony from Jean's other children and OPA's staff. The superior court thus found that OPA had failed to demonstrate fraud by a preponderance of the evidence and had not made " any showing that there [had] been fraud in this case." The court allowed that a more formalized compensation arrangement might have been better but noted that it did not find the current arrangement to be exploitation, and that it was hard to understand " how one gets to [the] place where it is felt to be exploitation." The superior court therefore denied OPA's petition for an elder fraud protective order. The court allowed litigation of the conservatorship issue to continue, however.

         After the superior court's ruling, Sidney filed a motion seeking an award of $14,025 for attorney's fees and costs against OPA. Jean moved for a separate attorney's fees award against OPA for $8,607.75. Sidney alleged that a fee award was justified under Alaska Civil Rule 82, the standard fee-shifting scheme for civil cases; AS 13.26.131, the fee-shifting statute for guardianship and conservatorship cases; or AS 13.26.353(c), which provides a cause of action for failure to honor a power of attorney. Jean asserted that AS 13.26.131 was not applicable but that an award was justified under Rule 82 or AS 13.26.353(c). OPA opposed the motions, denying that it had filed its petition for a protective order in bad faith or without just cause.

         Meanwhile, the parties continued to litigate the conservatorship petition that Shelley had filed. OPA, participating in this proceeding as an interested party, sought additional discovery and opposed Sidney and Jean's motion for summary judgment. In December the parties settled the remaining issues from the conservatorship petition through the Adult Guardianship Mediation Program. The parties agreed to dismiss the conservatorship petition with prejudice and agreed to support Jean's wish to remain in her Juneau home until her death. They established a formal compensation scheme for Sidney, and Sidney agreed to make monthly reports to Shelley and Geoffrey about her expenditures as caregiver. Sidney also agreed to put the home up for sale upon Jean's death. Finally, Sidney and Jean agreed not to pursue an attorney's fee award against Shelley or Geoffrey. Sidney and Jean explicitly reserved their right to seek attorney's fees from OPA.

         Following the settlement of the conservatorship action, Jean again filed a motion for a fee award against OPA. She argued that OPA's continued litigation of the conservatorship proceeding was " in bad faith, vexatious, frivolous, and without just cause," thereby justifying a fee award. She argued that all factual issues had been resolved by the denial of the protective order and that continuing to litigate the conservatorship petition violated principles of collateral estoppel and res judicata. Sidney moved to join and supplement Jean's motion shortly thereafter. She asserted that the sum of her total incurred fees had risen to $36,195 and reiterated that Civil Rule 82, AS 13.26.131(d) and AS 13.26.353(c) justified a fee award. In response OPA argued that nothing " in the Probate Rules, Title 13, or applicable case law . . . support[s the] view that interested parties are subject to attorney fees under Rule 82" and argued that AS 13.26.353(c) did not apply.

         The superior court awarded full reasonable fees against OPA in the elder fraud protective order proceeding, finding that OPA's elder fraud " petition was brought without just cause" because an " objective observer who made reasonable inquiries would [not] conclude that there was just cause for believing that there was fraud or financial exploitation." In fact the superior court found that, far from committing fraud, Sidney had been providing loving care for her mother after quitting her job and moving home at her parents' request. It was evident that the proceedings arising from the allegations of fraud had cost the family significant time and expense, which the superior court sought to rectify with this award of attorney's fees.

         In the conservatorship proceeding, however, the superior court declined to award attorney's fees. There the superior court found that " by continuing to litigate the conservatorship proceeding" filed by the family members, OPA had not " initiated a proceeding that was malicious, frivolous, or without just cause" as required for a fee award under AS 13.26.131(d). OPA appeals the fee award in the protective order action, while Sidney and Jean (now Jean's estate) cross-appeal the denial of fees related to the conservatorship action.

         III. STANDARD OF REVIEW

          Although we review the reasonableness of fee awards for abuse of discretion,[4] we independently review " whether the trial court properly applied the law when awarding attorney's fees." [5] When such an inquiry " rests on a question of statutory interpretation, we apply our independent judgment in interpreting the statute." [6] In doing so, " we look to the meaning of the language, the legislative history, and the purpose of the statute and adopt the rule of law that is most persuasive in light of precedent, reason, and policy." [7]

         IV. DISCUSSION

         A. It Was Error To Award Attorney's Fees In The Elder Fraud Proceeding Because Neither AS 13.26.131 Nor Civil Rule 82 Applies.

          Alaska Statute 13.26.131(d) provides for fee shifting in guardianship proceedings if the court finds that the proceeding " was malicious, frivolous, or without just cause." The superior court applied this fee-shifting provision to the elder fraud protective proceeding at issue here, interpreting the text of the statute as suggesting that it should apply. Our decision in In re Vernon H., which was decided after the superior court's order in this case, explained that AS 13.26.131(d) applies to conservatorship proceedings as well as guardianship proceedings and that it displaces Civil Rule 82 in both types of proceedings.[8] But we have not yet addressed the question whether our holding in Vernon H. also encompasses elder fraud protective order proceedings. We conclude that elder fraud protective order proceedings are subject to a separate cost-recovery scheme that was established with the creation of the Office of Elder Fraud and Assistance, the office that prosecutes elder fraud cases and seeks protective orders on behalf of vulnerable elders. Accordingly, these proceedings are not subject to AS 13.26.131 or Civil Rule 82.

         1. The fee-shifting provision of AS 13.26.131(d) does not apply to elder fraud protective order proceedings.

          Title 13, Chapter 26 of the Alaska Statutes sets up a statutory regime for protective proceedings, including guardianship, conservatorship, and other protective order cases. The set of provisions under which OPA filed its elder fraud petition, AS 13.26.207-.209, was added to this chapter in 2012 in an effort to address the growing problem of fraud against elders in Alaska.[9] These provisions do not contain their own fee-shifting scheme; instead they rely on fee-shifting provisions codified elsewhere in the statutory regime.

         The cost-allocation statute applied by the superior court, AS 13.26.131, generally allocates costs in a guardianship or conservatorship proceeding between the petitioner, the respondent, and the State:

(a) Subject to (d) of this section, the [S]tate shall bear the costs of the visitor and expert appointed under AS 13.26.106(c).
(b) Subject to (c) and (d) of this section, the respondent shall bear the costs of the attorney appointed under AS 13.26.106(b), of the expert appointed under AS 13.26.109(d), of the guardian ad litem appointed under AS 13.26.025, and of other court and guardianship costs incurred under this chapter.
(c) The [S]tate shall pay all or part of the costs described in (b) of this section if the court finds that the payment is necessary to prevent the respondent from suffering financial hardship or from becoming dependent upon a government agency or a private person or agency.

         The final section of AS 13.26.131 then provides for cost-shifting in certain limited circumstances:

(d) The court may require the petitioner to pay all or some of the costs described in (a) and (b) of this section if the court finds that the petitioner initiated a proceeding under this chapter that was malicious, frivolous, or without just cause.

          Alaska Statute 13.26.131 falls within chapter 13.26, which also includes the protective order provisions of AS 13.26.207-.209 under which OPA filed the elder fraud protective order in this case. And the text of AS 13.26.131(d) suggests that this cost-shifting provision applies to all proceedings " under this chapter." By this logic, the superior court concluded that the cost-shifting provision applied to the protective order proceeding here. Jean's estate urges us to adopt this reasoning as well. But although it is understandable that the superior court focused on the plain text of this provision, our analysis does not end there.

          When interpreting a statute, " we begin with the plain meaning of the statutory text." [10] Then " we apply a sliding scale approach, where '[t]he plainer the statutory language is, the more convincing the evidence of contrary legislative purpose or intent must be'" in order for us to conclude that an alternative interpretation of the statute is more appropriate.[11] Here, although the meaning of the phrase " under this chapter" at first appears plain, the text of the other sections within AS 13.26.131 convinces us that the legislature could not have intended for that statute to apply in elder fraud proceedings. Specifically, subsections (a)-(c) of the statute allocate costs between the State and the respondent, but the definition of " respondent" in the elder fraud context is entirely different from the definition in the guardianship or conservatorship context. The guardianship statutes define " respondent" as the person who allegedly needs protection.[12] But the person who allegedly needs protection is not mentioned as a party in an elder fraud protective order proceeding. Instead, the elder fraud protective order statute refers to the " respondent" as the person who is accused of committing the fraud.[13] It would make little sense for the cost-allocation provisions of AS 13.26.131 to apply equally to both sets of " respondents," because the parties are in entirely different positions with respect to the proceedings.

         If we try to harmonize this conflict by applying a uniform definition of " respondent" under AS 13.26.131, it could lead to absurd results. What happens if we try to apply the elder fraud statute's definition of respondent to the guardianship cost statute? Under subsection (b), the accused is then required to pay the costs of appointed counsel, a respondent's expert, a guardian ad litem, and all " other court and guardianship costs incurred under this chapter." [14] The accused respondent must pay these costs, whether innocent or guilty, unless the costs are shifted to the petitioner under the rare circumstances described in subsection (d).[15] On the other hand, under subsection (c) the State may be required to pay any of these costs if such an order is " necessary to prevent the [accused] from suffering ...


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