Nov. 29, 2022
We should never be Royals
For attachment orders in financial elder abuse cases, we should never be Royals. This case clarifies and reminds practitioners that financial elder abuse actions are eligible for pretrial attachment orders.
News from the First District Court of Appeal: The Elder Abuse and Dependent Adult Civil Protection Act does not authorize the extraordinary remedy of pretrial attachment for prospective punitive recovery. In a case of first impression, the First District Court of Appeal in Royals v. Lu (2022) 81 Cal.App.5th 238 gave guidance regarding a pretrial right to attach order (RTAO) made in the course of a financial elder abuse case.
When it comes to Financial Elder abuse cases, at first glance, Royals v. Lu is not a particularly unusual case. In a probate action before the Contra Costa County Superior Court, Lisa Royals, the surviving daughter of the wealthy Chambers Daniels Adams, and Meng Jing Lu, his surviving spouse, brought competing claims of financial elder abuse against each other. Each alleged that the other engaged in a scheme to manipulate Adams with the objective of enriching herself at the expense of the other's expected inheritance. After Adams' death on Oct. 14, 2019 at the age of ninety-nine, Royals, as successor trustee and sole beneficiary of the Adams Trust - initially established by Adams and his former spouse who predeceased him by eleven years - filed a petition against Lu for return of alleged trust property and for financial elder abuse. Royals claimed she was to inherit everything from Adams but that Lu, who married Adams when he was ninety-five years old, unduly influenced him into selling a valuable beach house, encumbering his residence, and setting aside those funds in accounts for Lu's benefit. Lu then filed a cross-petition against Royals alleging that it was in fact Royals who exerted undue influence over Adams in an attempt to be his sole beneficiary to the detriment of his spouse, Lu.
However, in a move that is more unusual, Royals applied for a pretrial writ of attachment on the same day she filed her Petition against Lu, with vague factual support. In her application seeking a writ of attachment of $3,440,000, Royals checked the box on the associated Judicial Council form that "the facts showing [she] is entitled to judgment on the claim upon which the attachment is based are set forth with particularity in the verified complaint." Royals' petition prayed for punitive damages for financial elder abuse, treble damages under California Civil Code section 3345, and attorneys' fees and costs. Notably, Royals' petition alleged upon information and belief that Lu misappropriated "at least $1,095,000." Other than Royals' reference to her verified petition, she alleged no facts on which to base the attachment amount of more than three times the actual damages sought in her petition.
Lu opposed Royals' RTAO with extensive, detailed evidence about her relationship and history with Adams and several witness statements regarding Adams's affection for Lu and his testamentary intent. Royals then filed objections to the declarations and documentary exhibits, but the trial court made no ruling on those objections. The evidence stood uncontested when the trial court issued the RTAO. Lu timely appealed the order issuing the RTAO.
In the published portion of its decision, the Court focused on the two relevant statutory schemes - the Attachment Law (Code of Civil Procedure section 481.010 et seq.) and the Elder Abuse Act (Welfare and Institutions Code section 15657). Because the interplay between the Attachment Law and the Elder Abuse Act is an issue of first impression, the Court of Appeal spent significant time detailing each statutory scheme.
Attachment is a provisional remedy to aid in the collection of a money demand by seizing the property in advance of trial and judgment. However, it is considered a harsh remedy because it causes a defendant to lose control of his property before the claims against him are adjudicated, implicating his right to due process. Accordingly, there are strict and detailed procedural and substantive requirements that must be followed by any plaintiff/petitioner to obtain such a remedy. In order to be eligible to apply for attachment, plaintiff/petitioner must make a procedural showing that their claim has probable validity - that is, it is "more likely than not that the plaintiff will obtain a judgment against the defendant on that claim" (Code Civ. Proc., § 481.190). Substantively, there are four specific requirements: (1) the attachment request must be supported by competent evidence (id., § 482.040); (2) the attachment request must rest on an attachable amount (id. § 484.020(b)); (3) the attachment request must be based on a claim upon which an attachment may be issued (id. § 484.020(a)); and (4) the attachment request must be measured by the defendant's claimed indebtedness to the plaintiff/petitioner (id. § 483.015(a)(1)).
Attachment Law is construed strictly so as to safeguard a defendant's due process rights. In fact, the statutory remedy of attachment is limited to actions on a claim of, or claims for money, each of which is based upon a contract (Code Civ. Proc., § 483.010) with few exceptions. Outside the realm of claims for money based on breach of contract, the remedy of pretrial attachment is only available as an aid to civil enforcement of a limited number of statutes, including the Elder Abuse Act.
In contrast to the strict application of Attachment Law, the Elder Abuse Act is a remedial scheme to protect vulnerable elders and is generally construed broadly on behalf of plaintiffs/petitioners. The Elder Abuse Act calls out financial abuse as a class of claims for private enforcement and specifically allows for awards of attorneys' fees and costs upon a showing by preponderance of the evidence of financial abuse. Where there is clear and convincing evidence of recklessness, oppression, fraud, or malice of the perpetrator, punitive damages are also available.
In light of these two statutory schemes and even taking into account that the Elder Abuse Act be broadly construed in favor of elders, the Court of Appeal reversed the RTAO, finding that Royals failed to make the required showing in her application for a writ of attachment.
First, Royals failed to produce competent evidence to support her attachment application. Although she referenced her verified complaint in support of the compensatory damages of $1,095,000, her allegations were based only on her information and belief. When provided an opportunity to support her application by affidavit, she failed to do so.
Second, there was great uncertainty in the basis for the attachment amount. Only after supplemental briefing at the appellate level did Royals affirmatively state that the $3,440,000 figure was based on $1,095,000 in compensatory damages plus $2,190,000 in statutory penalties under Probate Code section 859 (whereby wrongful taking of trust or estate property requires penalty of double the value of the property taken) plus $150,000 in attorneys' fees and $5,000 in costs. The trial court record included none of this information. The Attachment Law requires a statement of the amount to be secured by the attachment, yet Royals merely stated a number in her application with no further basis for it.
Third, when the basis of Royals' attachment amount was eventually revealed, it included a number of items not allowable for attachment. The Court of Appeal looked to the overall statutory scheme of the Attachment Law, finding that the purpose thereof is to ensure that a reasonably ascertainable amount of damages is collectable upon judgment. Such an ascertainable amount relates to compensatory damages, not statutory penalties or punitive damages. The Attachment Law itself authorizes damages under contract unless authorized by other law. The Elder Abuse Act authorizes attachment for compensatory damages including attorneys' fees, but statutorily nothing more.
Finally, the attachment amount must be based on the plaintiff/petitioner's personal knowledge. Here, the alleged compensatory damages were based on information and belief, lacking competent evidence. Royals' allegations related to statutory penalties and punitive damages - meant to deter and punish rather than making anyone whole - were rejected by the court, as neither were available for attachment under the Elder Abuse Act.
The takeaway from this case is twofold. For one thing, it is painfully clear that Royals was egregiously deficient in her application for a writ of attachment, and we can learn a lot from her mistakes. Perhaps more importantly, however, this case clarifies and reminds practitioners in this area that financial elder abuse actions are eligible for pretrial attachment orders. In a circumstance where financial elder abuse includes undue influence and wrongful use or taking of property from an elder, getting that attachment order can help ensure that the alleged abuser does not abscond with the property. There is nothing more frustrating than a judgment that is not worth the paper it is printed on. A pretrial attachment order, when supported by the requisite evidence under the Attachment Law, can go a long way to make financial elder abuse litigation more successful.