February 6, 2018

A Significant Client Victory in the Colorado Court of Appeals

by Morgan Wiener

A joint team of H&H attorneys from our Trusts & Estates Litigation (formerly Fiduciary Solutions) and Commercial Litigation groups, including Christina Gomez, Morgan Wiener, Matthew Skotak, Katie Custer, Steve Masciocchi, and Kevin McAdam recently secured a significant victory for our client, a protected person under a conservatorship, in opinions issued by the Colorado Court of Appeals in two related appeals (16CA198 and 16CA625). At issue was the theft of about $1.5 million of the protected person’s assets by her brother, a tenured law professor at a major university, while serving as her conservator. Using a complicated scheme in which he had undisclosed conflicts of interest, the brother diverted approximately one-third of the protected person’s inheritance to trusts for the benefit of himself and his children. Two years later, after his wrongdoing was discovered and challenged, the Denver Probate Court found that the brother had breached his fiduciary duties and committed civil theft, and it ordered him to repay the stolen funds along with treble damages and attorney fees.

The brother appealed the decision on the merits, as well as a related decision that allowed the protected persons to pay some of her expenses (including additional attorney fees) from her trust.  Among the many issues litigated on appeal were

  • the probate court’s jurisdiction to reopen the probate proceedings,
  • compliance with notice and hearing requirements,
  • interpretation of the safe harbor statute for conflict of interest transactions by a conservator,
  • the probate court’s jurisdiction to hear civil theft claims,
  • the merits of the judgment on the civil theft claim,
  • the fairness of the hearing,
  • a conservator’s ability to create a trust for a protected person, and
  • the probate court’s jurisdiction over a trust that resides in another state but was funded by assets from a Colorado conservatorship.

Christina Gomez took the lead in the briefing, with substantial research support, drafting of arguments, and strategic advice from Morgan Wiener, Matt Skotak, and Katie Custer, and she argued both cases to the Court of Appeals last July, with Steve Masciocchi and Kevin McAdam assisting as mock judges and Steve also advising on other issues that came up along the way.

At the end of January, in a 57-page published, unanimous decision, the Court of Appeals affirmed the merits judgment in all respects and awarded the protected person her appellate attorney fees under the civil theft statute. On the same day, the court issued an unpublished decision in the second appeal, determining that additional findings were needed to explain the basis for the probate court’s jurisdiction over the protected person’s trust and remanding for the court to make those needed findings.

All in all, it was a great win for our client and an important precedent-setting case for Colorado probate law. Congratulations to the whole team!