Arlin George Riley, plaintiff-appellee/cross-appellant v. Matthew Riley, defendant-appellant/cross-appellee. -------------------------------------------------------- Arlin George Riley, plaintiff-appellee/cross-appellant v. Denise Riley, defendant-appellant/cross-appellee. ( 2017 )

IN THE COURT OF APPEALS OF IOWA
No. 15-1250
Filed February 8, 2017
ARLIN GEORGE RILEY,
Plaintiff-Appellee/Cross-Appellant,
vs.
MATTHEW RILEY,
Defendant-Appellant/Cross-Appellee.
--------------------------------------------------------
ARLIN GEORGE RILEY,
Plaintiff-Appellee/Cross-Appellant,
vs.
DENISE RILEY,
Defendant-Appellant/Cross-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Adams County, John D. Lloyd,
Judge.
Matt and Denise Riley appeal the judgment of the district court finding they
engaged in elder abuse by financially exploiting Arlin Riley. Arlin Riley cross-
appeals a portion of that ruling denying his request for the return of property.
APPEAL AFFIRMED; CROSS-APPEAL DISMISSED; AND REMANDED.
Matthew G. Sease of Kemp & Sease, Des Moines, for appellants/cross-
appellees.
Gina C. Badding of Neu, Minnich, Comito, Halbur, Neu & Badding, P.C.,
Carroll, for appellee/cross-appellant.
Heard by Mullins, P.J., and Bower and McDonald, JJ.
2
MULLINS, Presiding Judge.
Matt and Denise Riley appeal the judgment of the district court finding they
engaged in elder abuse under Iowa Code chapter 235F (2015) by financially
exploiting Matt’s father, Arlin Riley. They argue Arlin was not a vulnerable elder
within the meaning of chapter 235F, the district court improperly shifted the
burden of proof to Matt and Denise to affirmatively establish they did not unduly
influence Arlin, and the district court erred in finding Matt and Denise financially
exploited Arlin. Arlin cross-appeals a portion of that ruling denying his request for
the return of rental property and money he contends Matt and Denise withheld
from him. Upon our de novo review, we affirm the court’s ruling as to the issues
raised in Matt and Denise’s appeal. We determine the court’s order was not final
as to the issue’s raised in Arlin’s cross-appeal; thus, we treat the cross-appeal as
an application for interlocutory appeal, deny the application, and dismiss the
cross-appeal. We remand to the district court for consideration of appellate
attorney fees.
I. Background Facts and Proceedings
Arlin’s wife of thirty-seven years, Connie, died in July 2012. Arlin and his
wife have two children: Matt, who is married to Denise, and Katie. Following
Connie’s death, Arlin experienced depression and his children became
concerned with his ability to handle his finances.
On December 14, 2012, Arlin, accompanied by Matt and Denise, went to a
local bank over forty-five minutes away from the town in which they all lived and
withdrew $80,000 in cash from Arlin’s savings account. Matt drove separately
and sat outside the bank in his vehicle armed with a weapon for protection, while
3
Arlin and Denise went inside the bank to withdraw the money. On December 21,
Arlin, Matt, and Denise again went to the bank and withdrew $80,000 in cash
from Arlin’s savings account. Matt brought a weapon along for protection on this
occasion too because of the large amount of cash Arlin was withdrawing and the
distance they had to travel home with the money. At the hearing on the petition,
Arlin testified he withdrew the money so that it could be used to invest in real
estate rental properties because “[c]ash talks.” He further testified that on both
occasions after arriving at Matt and Denise’s home, he placed the cash in Matt
and Denise’s personal safe because he did not have a safe at his home. Matt
and Denise dispute this evidence and both testified at the hearing that on both
occasions, Arlin left their home with the cash and never placed it in their safe.
Matt and Denise testified they never saw the money and did not know what Arlin
did with it.
In early January 2013, certificates of organization were created for 322
Carroll Street LLC and 222 State Street LLC, with Denise listed as the registered
agent for both companies. On January 28, Matt prepared a written power of
attorney using a form from the Iowa State Bar Association, providing Matt the
power to facilitate the acquisition of real estate for investment purposes, access
Arlin’s bank accounts, and make gifts—including “mak[ing] gifts of [Arlin’s]
property to himself.” Arlin executed the form, and Denise notarized it. The
power expired by its terms in September 2013.
On February 4, 2013, Arlin transferred $60,000 from his savings account
to his checking account. He used $28,996.89 to purchase a property located at
322 Carroll Street in Boone. Arlin acquired the property in his name but
4
subsequently transferred it to 322 Carroll Street LLC through a quit claim deed
prepared and notarized by Matt. On February 8, Arlin used $29,108.20 to
purchase a second property located at 222 State Street in Boone. The property
was acquired in the name of 222 State Street LLC.
In March, Matt created a certificate of organization for 2811 Warford LLC.
Matt was listed as the organizer, and Denise was again listed as the registered
agent.
On April 18, a document entitled “RECEIPT” was allegedly created by
Arlin, stating his intention to gift all of his stocks in 322 Carroll Street LLC, 222
State Street LLC, and 2811 Warford LLC to Denise.1 The document further
provided Arlin was “transfer[ring] my title of the old Dodge truck” to Denise and
gifting $150,000 and his 1997 Ford F150 truck to Katie. The document also
stated Arlin would be putting his home in Granite City, Illinois, and his shares of a
farm he owned with his two brothers into a trust for the benefit of Matt and Katie.
The document stated the gifts “will be completed before my 67th birthday.”
On April 22, Arlin purportedly signed the minutes of special meeting for
322 Carroll Street LLC and 222 State Street LLC, transferring all of his stocks in
the two companies to Denise. Matt prepared all of the documentation for the
transfers, and all transfers were completed without consideration. Arlin testified
at the hearing he had never seen these documents before Matt and Denise’s
attorney provided them to him. He further testified the signatures on these
documents were not his.
1
The document provided Arlin was “gifting [his interest in the LLCs] to Denise due to
[his] fear of custody issues that are constantly going on with [Matt’s child from a prior
relationship].”
5
On April 30, Arlin purchased a third property located at 2811 Warford
Street in Perry in the name of 2811 Warford LLC. Arlin provided $37,610.72 for a
down payment on the property and became personally liable on the loan note2 in
the amount of $138,750. Arlin testified he had to finance the purchase because
his “credit was better than my son’s.”
The following day, on May 1, Arlin purportedly signed the minutes of
special meeting for 2811 Warford LLC, transferring all of his stocks in the
company to Denise.3
In early June, Matt created a certificate of organization for 1402 Willis
LLC. Matt was listed as the organizer and Denise was listed as the registered
agent.
On July 3, Matt and Denise purchased a property located at 1402 Willis
Avenue in Perry through 1402 Willis LLC. Although Matt and Arlin had previously
had conversations about Arlin financing the purchase of the property, no
evidence was presented indicating Arlin ever held an interest in this LLC or in the
real estate property located at this address. Matt and Denise ultimately
purchased the property using a cashier’s check in the amount of $45,600 that
Matt had purchased on June 12. Matt and Denise provided no explanation at the
hearing on the petition for the source of the cash used to purchase this property
2
Matt signed the mortgage securing the note as manager of 2811 Warford LLC.
3
The record is unclear whether this transfer resulted in Denise owning a 100% interest
in the LLCs transferred to her. Arlin testified at the hearing on the petition that he and
Matt had agreed Arlin would retain a 99% interest in 2811 Warford LLC, 222 State Street
LLC, and 322 Carroll Street LLC, while Matt would receive a 1% interest in the three
LLCs to compensate him for his management of the properties. Matt and Denise both
testified at the hearing Matt did not own any interest in the LLCs owning the properties or
in the properties themselves.
6
but denied it came out of the $160,000 Arlin had withdrawn from the bank in
December 2012.
On August 2, Matt took Arlin for a pretreatment assessment with a
counseling provider “due to concerns regarding his father’s impulsive and
irrational choices, unresolved grief over the loss of his wife, and symptoms of
depression.” Arlin completed therapy with his counselor in March 2014.
On August 5, 2013, Matt, using power of attorney, withdrew $3232.25
from his father’s checking account after learning Arlin had sent a total of $30,000
of the life insurance proceeds Arlin had received after his wife’s death to
someone he did not know overseas.4 As a result of the withdrawal, Arlin’s
account incurred eight overdraft fees in the amount of $35, plus a return item fee
in the amount of $35, totaling $315 in fees. On August 12 and 13, Denise
deposited $750 into Arlin’s account, for a total deposit of $1500. On October 23,
Denise withdrew $2040 in cash from her business checking account.5 Matt and
Denise presented evidence of a document purportedly signed by Arlin
acknowledging receipt of $2040 in cash from Matt.
4
It is unclear from the record when the transfers started or ended, how many transfers
occurred, how much each transfer was for, or exactly how much money was sent in
total. There was testimony that Arlin started sending money in late 2012 and continued
sending it in increments—despite Matt and Katie having told Arlin it was a scam—until
August 2013 when Matt discovered the transfers had continued and withdrew the
money.
5
There is no evidence in the record other than Denise’s testimony to show the money
withdrawn from Arlin’s account was deposited into this account. Denise also testified
she did not have checks for this account to transfer the funds back to Arlin and did not
use other forms (e.g., cashier’s checks, money orders, etc.) because “they charge.”
Thus, she made direct transfers between the accounts and ultimately withdrew the cash
because the amount of money and number of transfers were restricted.
7
On June 13, 2014, Arlin met with his attorney who represented him at the
hearing on the petition, to review the trust prepared by a different attorney. 6 On
August 26, Arlin called the attorney who had prepared the trust requesting
information from Matt regarding the four LLCs at issue.
In September 2014, a recorded phone call between Katie and Matt took
place. During the phone call, Katie questioned Matt about information on the
LLCs at issue and why he refused to provide information and an accounting
regarding the LLCs to Arlin. Katie was under the impression Arlin still intended to
put the LLCs owning the rental properties into a trust and needed information
from Matt in order to do so. Matt stated Arlin was “a day late and a dollar short
on getting it done” and also stated he had told Arlin to scratch the trust idea.
Matt told Katie that Arlin did not have any ownership interest in the LLCs but did
not tell her the LLCs had been transferred to Denise in 2013. Matt also told Katie
he had control over their mother’s money and would “dictate what happens” with
it. Matt repeatedly stated he believed Arlin was mentally incompetent and unable
to control his own finances. Katie told Matt she believed Arlin was competent
and capable of handling his finances since he had completed mental-health
counseling six months before, and she was sure Arlin’s counselor would say he
was competent to take care of himself. Katie stated she thought it would be hard
6
It is unclear from the record when Arlin first met with the attorney about creating a trust.
Arlin testified at the hearing he could not recall when he discussed creating a trust to put
the four rental properties, the farm shares, and the house in Granite City into. Katie
testified the family discussed putting the four rental properties, the Granite City house,
and the farm shares into a trust “right at the beginning—oh, right after my mom passed
away.” Denise testified the meeting to discuss the trust took place in 2012, and prior to
the properties being purchased, they were supposed to go into the trust. Matt testified
they had discussed putting the rental properties, the house in Granite City, and the farm
shares into a trust.
8
for Matt to prove Arlin was not competent. Matt responded, “I think . . . it’s going
to be hard to prove that his money is his money then.”
On November 17, Arlin’s counselor wrote a letter stating: “It has been
brought to this provider’s attention that Arlin’s competence is being put into
question for legal decisions by his son, Matthew.” The letter further provided: “It
is in this writer’s opinion that Arlin, is in fact, competent to all of his legal and non-
legal affairs. Arlin is capable of making sound decisions and judgments
regarding any and all entities in his life.” The letter also stated: “It is in this
writer’s opinion that the discord between Arlin and Matthew, have caused
Matthew to make allegations regarding his father’s mental capabilities regarding
legal endeavors that they may share together.”
On February 2, 2015, Arlin’s attorney sent a letter to Matt and Denise
requesting an accounting of (1) the money Matt removed from Arlin’s checking
account in August 2013; (2) all activities Matt conducted while acting as attorney-
in-fact for Arlin; (3) the $160,000 in cash Arlin entrusted to Matt and Denise;
(4) the four real estate rental properties at issue; and (5) the assets of each of the
four LLCs. The letter also requested copies of the operating agreements, the
documentation evidencing Arlin’s membership units, the minutes of meetings, the
bank statements, and the tax returns for each of the four LLCs owning the four
real estate rental properties.
On March 31, 2015, Arlin filed petitions for relief from elder abuse
pursuant to Iowa Code chapter 235F against Matt and Denise. That same day,
the district court entered a temporary protective order restraining Matt and
Denise from having contact with Arlin and prohibiting them from exercising
9
control over Arlin’s funds, benefits, property, resources, belongings, or assets.
The court scheduled a hearing within the time prescribed by statute but later
continued the hearing based upon an agreement by the parties. Arlin, Katie,
Matt, Denise, and a representative from Arlin’s bank testified at the hearing. Arlin
testified he did not gift his interest in the three LLCs (322 Carroll Street LLC, 222
State Street LLC, and 2811 Warford LLC) to Matt or Denise. Arlin and Katie both
testified Arlin did not gift any money to Katie pursuant to the April 18 document
entitled “RECEIPT.”7 Arlin also presented evidence he retained the titles to the
two trucks mentioned in the document.
Following the hearing, Arlin filed a posttrial memorandum requesting (1) a
full accounting from Matt and Denise of their financial activities involving Arlin’s
money and property; (2) a return of $1732.25 withdrawn from Arlin’s checking
account by Matt, plus reimbursement of $315 in overdraft fees, for a total of
$2047.25; (3) a return of $160,000 in cash that Arlin entrusted to the care of Matt
and Denise; (4) a transfer to Arlin of Denise’s interest in the four LLCs owning the
four rental properties; and (5) payment of Arlin’s attorney fees.
On June 18, the district court entered an order finding Arlin was a
vulnerable elder within the meaning of chapter 235F and a victim of elder abuse
“as a result of his age, relationship to [Matt and Denise,] and emotional turmoil
following his wife’s death.” The court also found Matt “ha[d] wholly failed to bring
forth any evidence affirmatively establishing that the transfers to Denise were
freely and voluntarily done with full knowledge by [Arlin],” and “[a]lthough the
7
Katie admitted Arlin had made at least five payments on her student loans in the
amount of $350 each during 2013 but also stated Arlin had refused her request for
$20,000 to pay off her loans.
10
transfers were to Denise rather than Matthew, Denise was fully complicit in the
transfers and actively facilitated them.” Thus, the court ordered Matt and Denise
to transfer 2811 Warford LLC, 222 State Street LLC, and 322 Carroll Street LLC
to Arlin. The court also ordered Matt and Denise to “provide a full and complete
accounting of all income and expenses for each of the LLCs,” as well as any
copies of any rental agreements or terms of occupancy between the LLCs and
any tenants, any rental deposits, and any documentation evidencing any
obligation or debt of any of the LLCs. The court “restrained and enjoined [Matt
and Denise] from taking any actions which might be detrimental to any of the
LLCs, or adversely impact the ability of the LLCs to meet their financial
obligations.”
Additionally, the court found the $3232.25 Matt had withdrawn from Arlin’s
checking account in August 2013 appeared to have been “fully repaid.” The
court further noted Matt and Denise “may also have obtained control over cash of
[Arlin’s] in the amount of $160,000. The fact that this amount of cash was
withdrawn in two equal withdrawals is clear. What is not clear is what happened
to the money after that.” Thus, the court ordered Matt and Denise to provide
Arlin and the court “proof of the source of the cash used to purchase the real
estate owned by 1402 Willis LLC.” Further, the court ordered Matt and Denise to
pay attorney fees to Arlin in the amount of $3656.20. Finally, “the court retained
jurisdiction to enter such other and further orders as may be necessary to protect
[Arlin] under chapter 235F.”
Matt and Denise appeal; Arlin cross-appeals.
11
II. Jurisdiction
We must first decide a jurisdictional issue regarding the appealability of
the district court’s order. The appeal and cross-appeal each assume there was a
final judgment from which their appeals could be taken. During oral arguments,
each party argued the judgment was final, and the retention of jurisdiction by the
district court was merely for enforcement or collateral purposes. “Even though
neither party has questioned our jurisdiction to hear and decide this case, we will
sua sponte dismiss an appeal that is neither authorized by our rules nor
permitted by court order.” River Excursions, Inc. v. City of Davenport, 359
N.W.2d 475, 477 (Iowa 1984). We must determine whether the district court’s
order was a final judgment, appealable as a matter of right, or merely an
interlocutory decision, which may be appealed only if permission is granted by
the appellate court. See Iowa Rs. App. P. 6.103(1), (3), 6.104. “[A] final
judgment conclusively adjudicates all of the rights of the parties.” Rowen v.
LeMars Mut. Ins. Co., 357 N.W.2d 579, 581 (Iowa 1984). “A ruling is not final
when the trial court intends to act further on the case before signifying its final
adjudication of the issues.” River Excursions, 359 N.W.2d at 477. “In other
words, an order is interlocutory if it directs an inquiry into a matter of fact
preparatory to a final decision.” In re C.S., 516 N.W.2d 851, 857 (Iowa 1994).
Retention of jurisdiction of matters collateral to the subject matter of an appeal, or
for purposes of enforcing a final order, does not render an order interlocutory.
See Gutierrez v. Wal-Mart Stores, Inc., 638 N.W.2d 702, 707 (Iowa 2002).
In its ruling, the district court concluded Arlin was a vulnerable elder
protected by chapter 235F and Matt and Denise committed elder abuse by
12
financial exploitation. The court ordered Matt and Denise to transfer ownership
of and provide copies of rental agreements and other documents for 322 Carroll
Street LLC, 222 State Street LLC, and 2811 Warford LLC to Arlin, within thirty
days. With respect to those transfers, the court ordered Matt and Denise to
provide a full accounting within sixty days. The court also entered a restraining
order to prohibit Matt and Denise from taking any actions that might be
detrimental to any of the LLCs and retained jurisdiction to enter “further orders as
may be necessary to protect [Arlin] under chapter 235F.”
The final provision might be considered a typical reference to subsequent
enforcement or other purely collateral matters. But the district court also ordered
Matt and Denise to submit proof of the source of the cash used to purchase the
fourth property owned by 1402 Willis LLC within thirty days. In its findings of fact,
the court found Matt and Denise purchased that fourth property through 1402
Willis LLC and further found “no indication that [Arlin] ever had an interest in this
LLC or the subject real estate. [Matt and Denise] provided no explanation of the
source of the cash used to purchase this property.” The court also found Matt
and Denise “may also have obtained control over cash of [Arlin’s] in the amount
of $160,000. The fact that this amount was withdrawn in two equal withdrawals
is clear. What is not clear is what happened to the money after that.” Further, in
its ordered provisions, the court did not explicitly grant or deny Arlin’s requested
relief for 1402 Willis LLC. Instead, the district court ordered Matt and Denise to
submit proof of the source of the cash for the purchase of the 1402 Willis Avenue
property. It seems the court was seeking to determine whether there was a link
between that source of cash and the “missing” $160,000. If the cash for the
13
purchase of 1402 Willis Avenue is ultimately linked to a portion of Arlin’s
$160,000, then it follows the district court was anticipating additional relief when it
expressly retained jurisdiction to enter further orders; conversely, if no link is
found, perhaps the court might enter a further order denying relief as to that
property.
On our review of the record and the district court’s order, we are not
convinced the court’s ruling “conclusively adjudicate[d] all of the rights of the
parties.” Rowen, 357 N.W.2d at 581. Instead, it appears as though the court
entered a partial ruling on Arlin’s claims, requested further evidence on Arlin’s
claims regarding the $160,000 in cash and the property located at 1402 Willis
Avenue, and retained jurisdiction to enter further orders on those claims. See In
re C.S., 516 N.W.2d at 857; River Excursions, 359 N.W.2d at 477. The standard
rule is that if the district court’s order was not a final judgment but rather an
interlocutory decision, the order is not appealable as a matter of right. See Iowa
R. App. P. 6.103(1), (3); see also Green v. Advance Homes, Inc., 293 N.W.2d
204, 207 (Iowa 1980).
That standard rule is not, however, without exception. Green, 293 N.W.2d
at 207. For purposes of an appeal, a case “may have more than one final order.”
Id. “[I]t is possible for an order to put it beyond the power of the court to return
the parties to their original positions even though it does not conclusively
adjudicate all the rights of the parties.” Lyon v. Willie, 288 N.W.2d 884, 886
(Iowa 1980). With regard to its finding that Arlin was a vulnerable elder within the
meaning of chapter 235F, the district court’s order was final. As to the ordered
provisions governing the first three LLCs and their properties, the court’s order
14
was final. Likewise, the restraining order for the protection of Arlin was final.
Those provisions required no further rulings and the order did not anticipate any
further rulings as to those provisions, except perhaps enforcement. On the other
hand, the order from which the appeal and cross-appeal were taken did not
conclusively adjudicate the rights of the parties as to 1402 Willis LLC or the
propriety of the source of the funds used for the purchase of the property in that
LLC. The district court did not finally adjudicate those issues and was apparently
waiting for compliance concerning disclosure of the source of the funds for that
property before finally adjudicating those issues. We determine this is the
exceptional case in which there has been a final appealable order as to some
issues, while the court retained jurisdiction to rule on remaining issues. See id.at 886–87. Accordingly, we will consider the issues raised by Matt and Denise
on appeal as those were the subject of a final order.
But, because we determine the issues relating to 1402 Willis LLC and the
source of funds for the purchase of the property of the LLC are the subject of
interlocutory-ordered provisions, we will “proceed as though the proper form of
review ha[s] been requested.” Iowa R. App. P. 6.108; see also In re Marriage of
Denly, 590 N.W.2d 48, 51 (Iowa 1999) (“An appeal improperly presented as
arising from a final judgment is regarded as an application for interlocutory
appeal.”). Thus, we consider Arlin’s cross-appeal as an application for
interlocutory appeal. “As a general rule, . . . we sparingly grant interlocutory
appeals.” Buechel v. Five Star Quality Care, Inc., 745 N.W.2d 732, 736 (Iowa
2008). “The possibility of fragmented appeals—one interlocutory, a second
taken from the final judgment—should be avoided whenever possible.” River
15
Excursions, 359 N.W.2d at 478. In determining whether we should grant an
application for interlocutory appeal, we must consider (1) whether the order
involves substantial rights, (2) whether the order “will materially affect the final
decision,” and (3) the interests of judicial efficiency. Iowa R. App. P. 6.104(2);
see also Denly, 590 N.W.2d at 51.
In Rowen, the supreme court granted the application for interlocutory
appeal finding the district court had “adjudicate[d] the particulars of equitable
relief, leaving unsettled only issues that might arise during implementation of the
plan.” 357 N.W.2d at 582. Here, it appears the district court ordered Matt and
Denise to submit additional evidence to aid the court in making a decision as to
Arlin’s remaining claims—his request for an accounting of the $160,000 he
entrusted to Matt and Denise’s care and an accounting of 1402 Willis LLC, which
owns the property Arlin claims he provided the funds for purchase. “Piecemeal
appeals often contribute little more to the judicial process than additional
expense and delay.” Mason City Prod. Credit Ass’n v. Van Duzer, 376 N.W.2d
882, 887 (Iowa 1985). We interpret the district court’s order to defer a final
adjudication of the 1402 Willis LLC and its property until Matt and Denise made
the disclosure required per its order. Thus, we decline to grant Arlin’s application
for interlocutory appeal in the interests of judicial efficiency. See id. (“Even if we
were to grant and decide this interlocutory appeal, we might well have to decide
one or more later appeals of issues not yet addressed by the district court.”).
Accordingly, the cross-appeal is dismissed.
16
III. Standard of Review
The parties disagree on the applicable standard of review in this case.
Matt and Denise contend the matter was tried in equity and is similar to claims
brought under chapter 236 (the Domestic Abuse Act), and therefore, the
standard of review is de novo. See Knight v. Knight, 525 N.W.2d 841, 843 (Iowa
1994). Arlin claims that because the district court ruled on objections as they
were made at the hearing, the case was tried as a law action, and therefore, our
review is for correction of errors at law. See Bacon ex rel. Bacon v. Bacon, 567
N.W.2d 414, 417 (Iowa 1997); Knight, 525 N.W.2d at 843. We look to the
“pleadings, relief sought, and the nature of the case” to determine whether the
case was legal or equitable. Passehl Estate v. Passehl, 712 N.W.2d 408, 414
(Iowa 2006). “We also consider ‘whether the court ruled on evidentiary
objections’ as an important, although not dispositive, test of whether the case
was tried in law or equity.” Id. (citation omitted). Also, “a trial court generally
issues a ‘decree’ in an equitable action and a ‘judgment’ in a legal action.” Van
Sloun v. Agans Bros. Inc., 778 N.W.2d 174, 178 (Iowa 2010).
In his petition, Arlin did not seek monetary damages, but rather, he sought
an order refraining Matt and Denise from exercising control over his funds,
benefits, property, resources, belongings or assets and requiring Matt and
Denise to provide information about, a complete accounting for, copies of
documents pertaining to, and the return of the four LLCs owning real estate
properties located at 322 Carroll Street, 222 State Street, 2811 Warford Street,
and 1402 Willis Avenue. Arlin also requested the return of the remaining funds
Matt removed from his checking account in August 2013, an accounting of all of
17
Matt’s financial activities as Arlin’s attorney-in-fact, and an accounting for and the
return of the $160,000 Arlin claimed he entrusted to Matt and Denise. Thus, Arlin
asked the court to use its equitable powers. See Passehl, 712 N.W.2d at 414.
Furthermore, the relief authorized in Iowa Code section 235F.6(2) after a judicial
finding of elder abuse and financial exploitation is primarily—if not completely—
equitable in nature and is consistent with the relief requested by Arlin in this
case.
Moreover, neither party filed a jury demand. The court’s final decision was
entitled “order” rather than “decree” or “judgment.”8 The court ordered Matt and
Denise to transfer three of the four LLCs to Arlin, to provide information and an
accounting for each of the three LLCs, to provide Arlin and the court proof of the
source of the cash used to purchase the fourth property, and it further restrained
and enjoined Matt and Denise from taking any actions that may harm the LLCs—
all of which are equitable remedies. Additionally, although the district court here
ruled on some evidentiary objections during the hearing, the court repeatedly
overruled counsels’ objections and did not exclude any evidence that would
hinder our review of the record. See id.We therefore conclude the case was tried in equity before the district
court, and thus, our review of the record in this case is de novo. See Iowa R.
App. P. 6.907. Accordingly, we give weight to the factual findings of the district
8
We note the court ordered Arlin “shall have judgment against” Matt and Denise for
attorney fees but conclude this order did not convert the equitable action into one at law.
See Van Sloun, 778 N.W.2d at 178 (“[An] action is ordinarily classified according to what
appears to be its primary purpose or controlling issue.”).
18
court, especially its assessments of witness credibility, but we are not bound by
them. Iowa R. App. P. 6.904(3)(g).
To the extent the parties raise questions of statutory interpretation, our
review is for correction of errors at law. See In re Det. of Johnson, 805 N.W.2d
750, 753 (Iowa 2011).
IV. Analysis
Matt and Denise contend Arlin was not a “vulnerable elder” within the
meaning of Iowa Code chapter 235F, the district court improperly shifted the
burden of proof to Matt and Denise to affirmatively establish they did not unduly
influence Arlin, and the district court erred in finding Matt and Denise financially
exploited Arlin.
Chapter 235F allows a “vulnerable elder” to “seek relief from elder abuse
by filing a verified petition in the district court.” Iowa Code § 235F.2(1). Upon the
filing of such a petition, the court shall hold a hearing at which the petitioner
“must prove the allegation of elder abuse by a preponderance of the evidence.”
Id. § 235F.5(1).
Matt and Denise claim Arlin did not meet his burden in establishing he was
a “vulnerable elder” as defined in Iowa Code section 235F.1(17). Section
235F.1(17) provides, “‘Vulnerable elder’ means a person sixty years of age or
older who is unable to protect himself or herself from elder abuse as a result of
age or a mental or physical condition.” A vulnerable elder may prove the
allegation of elder abuse through his own testimony. Id. § 235F.5(6)(a).
It is undisputed Arlin was over the age of sixty at the time the three LLCs
were transferred to Denise. Arlin presented no evidence his age alone made him
19
incapable of protecting himself from elder abuse. Thus, we examine whether
Arlin suffered from a mental or physical condition at the time of the transfers that
made him unable to protect himself from elder abuse.
Following his wife’s death in July 2012, Arlin became depressed. At the
hearing on the petition, Arlin testified his depression lasted only six or seven
months—until approximately December 2012 or January 2013. He admitted he
was no longer depressed by the time he withdrew the $160,000 from the bank,
acquired the properties at issue, transferred the LLCs owning the relevant
properties to Denise, or when he sent a total of $30,000 to an unknown person
overseas—a period of time spanning from December 2012 until early August
2013. However, Arlin also testified he “was receiving counseling at [the time he
was depressed].” Matt took Arlin to a mental-health counselor in early August
2013—over a year after Arlin’s wife died and after Arlin withdrew the money from
the bank, acquired and transferred the properties, and sent the large sum of
money overseas—due to Matt’s concerns about his father’s mental health.
Furthermore, throughout the record, there are many indications Matt and
Denise both believed Arlin was unable to take care of his finances due to his
mental-health status. In August 2013, Matt, acting as power of attorney for Arlin,
withdrew $3232.25 from Arlin’s checking account when he learned the total
amount of money Arlin had sent overseas. Additionally, in a phone call between
Matt and Katie in September 2014, Matt repeatedly stated he did not believe
Arlin was mentally competent enough to handle his own finances. In text
messages and at the hearing, Denise described Arlin as “out of control” and
“irrational.”
20
Matt and Denise claim a letter from Arlin’s counselor clearly shows Arlin
“was not and is not a vulnerable elder.” Yet, the counselor wrote the letter in
November 2014 in response to allegations by Matt that Arlin was incompetent.
The letter noted Matt’s concerns in August 2013 that Arlin was making “impulsive
and irrational choices” as a result of his “unresolved grief over the loss of his
wife, and symptoms of depression.” The counselor then writes: “Arlin, is in fact,
competent to all of his legal and non-legal affairs. Arlin is capable of making
sound decisions and judgments regarding any and all entities in his life.” Arlin’s
counselor wrote the letter a mere two months after the phone call occurred
between Katie and Matt in which Matt claimed Arlin was mentally incompetent. It
is clear the counselor’s letter is in reference to Arlin’s mental health at the time
the letter was written in the fall of 2014 and was not referencing Arlin’s mental
health in 2013 before he began counseling. Matt apparently took actions on his
belief Arlin was not capable of making sound decisions concerning his financial
affairs. Arlin’s testimony at the hearing raises serious doubt as to his own
understanding of his financial decisions and participation. Based on our review
of the evidence, we find Arlin was suffering from a mental condition at the time he
withdrew $160,000 from the bank, acquired the three real estate properties
located at 322 Carroll Street, 222 State Street, and 2811 Warford Street, and
transferred the three LLCs holding these properties to Denise.
We next consider whether Arlin was unable to protect himself from elder
abuse due to his mental condition. As relevant here, the code defines “elder
abuse” to include “financial exploitation.” Iowa Code § 235F.1(5)(a)(4).
“Financial exploitation” occurs “when a person stands in a position of trust or
21
confidence with the vulnerable elder and knowingly and by undue influence,
deception, coercion, fraud, or extortion, obtains control over or otherwise uses or
diverts the benefits, property, resources, belongings, or assets of the vulnerable
elder.” Id. § 235F.1(8). A person “stands in a position of trust or confidence with
the vulnerable elder” if the person is an “adult child[] or other relative by
consanguinity or affinity[9] of the vulnerable elder.” Id. § 235F.1(14). Section
235F.1(3) defines “coercion” as “communication or conduct which unduly
compels a vulnerable elder to act or refrain from acting against the vulnerable
elder’s will and against the vulnerable elder’s best interests.” “Undue influence”
is defined as “taking advantage of a person’s role, relationship, or authority to
improperly change or obtain control over the actions or decision making of a
vulnerable elder against the vulnerable elder’s best interests.” Id. § 235F.1(16).
Section 235F.1 does not define deception, fraud, or extortion.
Matt and Denise assert Arlin failed to prove by a preponderance of the
evidence that they financially exploited him or that he was unable to protect
himself from financial exploitation.10 Matt and Denise rely on the April 18
document entitled “RECEIPT” as proof they did not financially exploit Arlin
9
“The meaning of affinity is well established. It is the relationship which one spouse has
because of the marriage to blood relatives of the other. ‘By the marriage, one party
thereto holds by affinity the same relation to the kindred of the other that the latter holds
by consanguinity . . . .’” State v. Allen, 304 N.W.2d 203, 207 (Iowa 1981) (citation
omitted). Thus, Denise is a person who “stands in a position of trust or confidence” with
Arlin. See Iowa Code § 235F.1(14).
10
Matt and Denise also assert they assisted Arlin in managing his finances in good faith.
See Iowa Code § 235F.1(5)(b)(4). Arlin claims Matt and Denise failed to preserve error
on this argument. The district court did not rule on this issue and neither party sought a
ruling or clarification on the issue after the order was entered; therefore, it is waived.
See Meier v. Senecaut, 641 N.W.2d 532, 537 (Iowa 2002) (“It is a fundamental doctrine
of appellate review that issues must ordinarily be both raised and decided by the district
court before we will decide them on appeal.”).
22
because he had intended to gift the three LLCs to Denise along with the Dodge
truck and also intended to gift $150,000 and the Ford truck to Katie. Matt and
Denise acknowledge Arlin only completed one of these transfers—and did so
immediately, while the other transfers had not yet occurred at the time he filed
the petition almost two years later—but argue Arlin still had time to complete the
other three gifts.11
The record shows Matt convinced Arlin to use the life insurance proceeds
Arlin received after his wife’s death to invest in real estate rental properties.
They agreed Arlin would have a 99% interest in the properties, while Matt would
have a 1% interest to compensate him for his management of the properties.
Arlin testified he never received any income from the properties before or after
the transfer of the LLCs to Denise. Matt prepared certificates of organization for
the LLCs at issue and listed Denise as the registered agent. He also prepared
the form giving him power of attorney for Arlin, which allowed him to make gifts of
his father’s property to himself, and Denise notarized it. After Arlin purchased the
property located at 322 Carroll Street, Matt prepared a quit claim deed to transfer
the property into the LLC of the same name that he had formed. Arlin testified at
the hearing he did not sign the April 18 document showing he intended to
transfer 322 Carroll Street LLC, 222 State Street LLC, and 2811 Warford LLC to
Denise. Matt prepared the minutes of special meetings for the three LLCs
providing for the transfer of 100% of Arlin’s interest in each LLC to Denise
11
However, the record shows Arlin no longer had sufficient funds to make such a large
gift to Katie. In December 2012, Arlin had $274,048.97 in his savings account and
$10,200.13 in his checking. In April 2015, Arlin had a total of $6273.79 in his savings
account and another $2551.95 in his checking.
23
without consideration; Arlin testified he did not sign these documents. He also
presented evidence he did not complete any of the other transfers intended as
gifts to his children or their spouses as provided in the April 18 document.
Furthermore, the April 18 document provided Arlin intended to transfer his
interest in 2811 Warford LLC to Denise before the closing on the property had
even occurred and without regard to Arlin’s personal liability on the loan note for
the property in the amount of $138,750. Additionally, Arlin testified he did not file
any gift tax returns.
At the time Arlin acquired and transferred the rental properties at issue, he
was grieving the loss of his wife of thirty-seven years. He fell victim to a scam
perpetrated by some unknown person abroad and ended up sending a total of
$30,000 to someone he did not know. The record indicates Matt believed Arlin
was unable to manage his own finances as a result of this incident, and so Matt,
acting as attorney-in-fact, withdrew all of the remaining funds Arlin had in his
account. In June 2014, Arlin met with his attorney about reviewing a trust he had
had drafted to put the rental properties into, clearly indicating he still believed he
was a member of the LLCs. In the September 2014 phone call between Matt
and Katie, Katie asked Matt about the trust and why he would not provide Arlin
with information about the LLCs so that Arlin could move forward with the trust.
Matt told Katie that Arlin no longer had any interest in the LLCs at issue but
refused to state why Arlin no longer had an interest in them or that the LLCs had
been transferred to Denise over a year before. He stated only that Arlin “isn’t
going to have nothing.” Matt also stated he had control over their mother’s
money and would “dictate what happens” with it and if people “want to be
24
whatever about it, then . . . nobody will get nothing.” Matt stated Arlin would have
a hard time proving the money was his.
Upon our de novo review of the record before us, we find Arlin proved by a
preponderance of the evidence he was over the age of sixty and unable to
protect himself from financial exploitation by Matt and Denise as a result of his
depression following his wife’s death. See Iowa Code § 235F.1(17).
Accordingly, we affirm the district court’s ruling ordering Matt and Denise to
transfer 2811 Warford LLC, 222 State Street LLC, and 322 Carroll Street LLC to
Arlin and to provide a complete accounting for each of these three LLCs, any
copies pertaining to any rental agreements or deposits concerning the properties
owned by the LLCs, and any documentation regarding any obligations or debts of
the LLCs. We affirm the court’s order restraining and enjoining Matt and Denise
from taking any detrimental actions that may adversely impact the LLCs.
Arlin also requests appellate attorney fees. Iowa Code section 235F.6(7)
provides the court “may order that the defendant pay the attorney fees and court
costs of the vulnerable elder.” Arlin contends chapter 235F does not limit an
award of attorney fees to those incurred in the district court. Therefore, he
claims, appellate attorney fees may be awarded. See, e.g., Schaffer v. Frank
Moyer Constr., Inc., 628 N.W.2d 11, 23 (Iowa 2001) (concluding that because
statute did not limit attorney fees to those incurred in district court it also
contemplated the award of appellate attorney fees); Bankers Trust Co. v. Woltz,
326 N.W.2d 274, 278 (Iowa 1982) (holding that the right to attorney fees is
statutory, and that a statute which justifies awarding attorney fees in the trial
court also justifies awarding attorney fees in the appeal).
25
Because we are dismissing the cross-appeal in this case in order to give
the district court an opportunity to bring to completion the interlocutory provisions
of its prior order, we leave the issue of attorney fees for consideration and
resolution by the district court. See Schaffer, 628 N.W.2d at 23.
APPEAL AFFIRMED; CROSS-APPEAL DISMISSED; AND REMANDED.