In the Matter of the Guardianship and Conservatorship of Sylvia Chott ( 2019 )

IN THE COURT OF APPEALS OF IOWA
No. 18-1499
Filed September 11, 2019
IN THE MATTER OF THE GUARDIANSHIP AND CONSERVATORSHIP OF
SYLVIA CHOTT,
KATHERINE MYER,
Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Polk County, Lawrence P.
McLellan, Judge.
Katherine Myer appeals the district court ruling finding she violated her
obligations to her mother Sylvia Chott as her mother’s power of attorney by
withdrawing funds from the mother’s bank account and ordering her to return the
money and pay attorney fees and court costs. AFFIRMED.
Eric G. Borseth of Borseth Law Office, Altoona, for appellant.
Chad W. Eichorn of Pearson Bollman Law, West Des Moines, for
appellee.
Considered by Potterfield, P.J., and Doyle and Mullins, JJ.
2
POTTERFIELD, Presiding Judge.
Katherine Myer appeals the district court’s decision ordering her to return
$29,597.29 to her mother, Sylvia Chott. Katherine transferred the money from
Sylvia’s bank account to her own while she had a power of attorney for Sylvia.
On appeal, Katherine argues the district court erred by: (1) reviewing the transfer
of funds under Iowa Code section 633B.116 (2017) as an agent’s use of a power
of attorney; (2) finding Katherine did not act in good faith by transferring the
money from Sylvia’s bank account to her own and that Sylvia did not act
intelligently and voluntarily when making the transfer; and (3) assessing attorney
fees and court costs against her. Katherine further argues Kenneth, her brother
and the current holder of Sylvia’s power of attorney, should pay her attorney fees
for this appeal. In response, Sylvia asks that we affirm the award of the district
court and award her appellate attorney fees.
I. Background Facts and Proceedings
This case involves three family members: siblings Katherine Myer and
Kenneth Chott-Olsen and their mother Sylvia Chott. At the time of trial, Katherine
was sixty-six years old and lived in West Des Moines; Kenneth was seventy and
lived in Indianapolis, Indiana. Sylvia was ninety-four and lived in Indianapolis as
well. Sylvia had lived in Illinois for many years and moved to West Des Moines
in 2009 to be closer to Katherine and her husband, Chuck. She moved to
Indianapolis in December 2017 after the events leading to this litigation.
Between 2009 and September 2017, Katherine and Chuck helped take
care of Sylvia. They arranged for her to live in an apartment in the same
apartment complex Katherine and Chuck lived in. Sylvia became dependent on
3
Katherine and Chuck in 2016 after she lost her driver’s license and was
diagnosed with dementia or early Alzheimer’s. She relied on Katherine and
Chuck to take her grocery shopping and otherwise help her each day.
In March 2010, Sylvia gave Katherine a durable power of attorney. The
power of attorney named Kenneth as an alternate. It gave Katherine the
authority to manage Sylvia’s finances and perform banking activities on Syliva’s
behalf, including the power “to receive and endorse checks and other negotiable
paper, deposit and withdraw funds (by check or withdrawal slips) that I now have
on deposit or to which I may be entitled in the future.” It directed Katherine to
“exercise all powers in [Sylvia’s] best interest and for [Sylvia’s] welfare.”
Katherine was unaware of the power of attorney until around 2015 and maintains
she never used it. Katherine testified at trial that she never paid Sylvia’s bills.
Instead, she only kept track of Sylvia’s bank account online to make sure Sylvia
had not accrued overdraft fees or gave too much money to charity. Katherine
emphasizes on appeal that Sylvia was always protective of her finances and did
not want other people managing them for her.
The transaction at issue here occurred on September 19, 2017. Katherine
testified Sylvia became worried about leaving her family with a large bill from
Medicaid if she had to go on long-term care and insisted on giving some of her
money to Katherine and Kenneth. To that end, Katherine devised a plan to
transfer money from Sylvia’s bank account to Kenneth and herself. Katherine
drafted a letter expressing Sylvia’s desire to transfer $29,597.29 to Katherine “for
services rendered that allow [Sylvia] to continue living apart from assisted care.”
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Katherine calculated the amount of compensation.1 On September 17, 2018,
Katherine and Sylvia went to Sylvia’s bank, got the letter notarized, and
transferred the money to Katherine’s bank account. Katherine never consulted
an attorney, accountant, or financial professional about the prudence of making
the transfer or its effect on Sylvia’s eligibility for Medicaid if she went on long-
term care before making the transfer.
Katherine and Sylvia did not discuss the transfer of funds at all until
Kenneth came to visit on October 10. Kenneth did not agree with the decision to
transfer the money and accused Katherine of attempting to take Sylvia’s money
and put her in an assisted living home. Sylvia did not speak to Katherine at any
point during the argument. The next day, Sylvia called Katherine and asked her
to return the money, which Sylvia characterized as a gift. Katherine refused.
She and Chuck had given some of the money to their children and spent some of
it themselves. Katherine ended the call and went to Sylvia’s apartment, where
she found Kenneth and Sylvia waiting for her. Kenneth again accused Katherine
of stealing Sylvia’s money. The two argued again, and Katherine left. On
October 12, Katherine and Chuck drafted a letter relinquishing Katherine’s power
of attorney to Kenneth. The letter noted Katherine “was responsible for [Sylvia’s]
well-being, finances, and care-taking” up until that day. Katherine and Chuck
had the letter notarized and delivered it to Sylvia the same day.
1
Katherine calculated the figure by taking Sylvia’s total savings ($72,194.58),
subtracting $13,000 from that amount to keep some money in Sylvia’s savings account
and transfer $1000 to her checking account, and then divided the remaining money
($59,194.58) in two, to split it equally between Katherine and Kenneth. Kenneth never
accepted his share.
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Sylvia filed the petition on February 16, 2018, requesting review of
Katherine’s actions as an agent under Iowa Code section 633B.116(b).
Following a trial, the district court determined Katherine owed fiduciary
duties to Sylvia when Katherine formulated the plan to transfer the money and
Katherine had the burden to prove by clear, satisfactory, and convincing
evidence she did not breach her fiduciary duties. The district court determined a
confidential relationship existed between Katherine and Sylvia such that
Katherine had the burden to prove by clear, satisfactory, and convincing
evidence that (1) she had acted entirely in good faith by transferring the money
and (2) Sylvia acted freely, voluntarily, and intelligently when making the
transaction. The district court held Katherine had not met any of these burdens
and ordered her to return the transferred money and pay attorney fees and court
costs. Katherine appeals.
II. Standard of Review
The parties agree actions under chapter 633B are tried in equity and are
reviewed de novo. Iowa R. App. P. 6.907. Inter vivos transfers are also
reviewed de novo. In re Herm’s Estate, 284 N.W.2d 191, 199 (Iowa 1979). On
de novo review, “[w]e give weight to the fact-findings of the trial court but are not
bound by them.” Id. “Of course this also applies to our review of trial court’s
finding of the existence of a confidential relationship.” Id.III. Discussion
On appeal, Katherine challenges the application of chapter 633B to her
conduct, the court’s determination that she did not act in good faith, the court’s
determination that Sylvia did not act intelligently and voluntarily when making the
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transfer, and the court’s award of attorney fees and court costs. We consider
each of her arguments in turn.
a. Application of Chapter 633B
Katherine argues the district court was wrong to review her actions under
chapter 633B because she never accepted the power of attorney.2 Under
chapter 633B, “a person accepts their appointment as an agent under a power of
attorney by exercising authority or performing duties as an agent or by any other
assertion or conduct indicating acceptance.” Iowa Code § 633B.113. Katherine
correctly asserts no evidence in the record indicates she used any of the powers
described in the power of attorney and the power of attorney imposed no
affirmative duties on Katherine other than to use it for Sylvia’s benefit and in good
faith. But acceptance of a power of attorney is not limited to use or performance
of duties imposed. See id. Katherine could have also accepted the power if the
record shows she engaged in “any other assertion or conduct indicating
acceptance.” Id. Neither “assertion” nor “conduct” are defined in chapter 633B,
so we give them their plain meaning. Iowa Comprehensive Petroleum
Underground Storage Tank Fund Bd. v. Mobil Oil Corp., 606 N.W.2d 359, 364
(Iowa 2000) (“[W]e give the words their plain and ordinary meaning when not
specifically defined by the legislature or when there is no particular legal
definition of the term.”).
2
Chapter 633B is the codification of the Iowa Uniform Powers of Attorney Act, 2014
Iowa Acts 1078. While the Act was adopted in 2014, it applies to powers of attorney
created before July 1, 2014, so long as the act in question occurred after that date. See
Iowa Code § 633B.403(1), (4) (“An act completed before July 1, 2014, shall not be
affected by this chapter.”). The planning and performance of the transaction here
happened in September 2017. As a result, the fact that the power of attorney was
created before the Act was adopted does not make chapter 633B inapplicable.
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From our review of the record, Katherine accepted the power of attorney
before the September 2017 transaction. In her answer to the petition, Katherine
admitted that she was appointed power of attorney some time before 2016. As
for the September 2017 transfer, the answer also states Katherine’s “actions
were taken upon the direction of Sylvia Chott and consistent with her
responsibilities as Attorney in Fact.” On direct examination, Katherine admitted
she took action consistent with the power of attorney, as she offered to pay
Sylvia’s bills for her:
Q. When did you become aware of [the power of attorney]?
A. I think two or three years ago. And it was one of those things,
okay, fine.
Q. What do you mean? A. I wasn’t going to do anything with
it.
Q. Did you ever use it? A. No, I never did. Not even to
pay—to sign checks. I had asked Mom one time if she wanted me
to pay her bills online, and she said, No, I want to do that myself. I
said, Okay. I never—I just never used it. It was just not necessary.
(Emphasis added.)
Finally, the October 12 letter relinquishing the power of attorney states
“Until this date, I was responsible for [Sylvia’s] well-being, finances, and care-
taking.” Taken together, this evidence shows Katherine made “assertion[s] or
conduct indicating acceptance” before the September 2017 transfer and that
Katherine was Sylvia’s agent under chapter 633B before that time. Id.; see also
Iowa Code § 633B.102(1) (“‘Agent’ means a person granted authority to act for a
principal under a power of attorney, whether denominated an agent, attorney in
fact, or otherwise.”). We conclude the district court was not wrong to evaluate
Katherine’s conduct under chapter 633B.
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b. Review of the Inter Vivos Transfer
Next, Katherine argues the district court improperly overturned the transfer
by erroneously concluding she had not met her burden to prove she acted in
good faith and Sylvia acted freely, voluntarily, and intelligently when making the
transfer. Katherine does not dispute the district court’s determination that she
and Sylvia had a confidential relationship. If a confidential relationship exists, the
transfer “is presumptively fraudulent and therefore presumptively the product of
undue influence.” Mendenhall v. Judy, 671 N.W.2d 452, 454 (Iowa 2003). Once
a confidential relationship has been established, the burden shifts to the grantee
to prove by clear, satisfactory, and convincing evidence the she acted in good
faith throughout the transaction and grantor acted freely, voluntarily, and
intelligently when she made the transfer. Jackson v. Schrader, 676 N.W.2d 599,
605 (Iowa 2003). “We have recognized that this ‘rule is particularly applicable
where one of the parties has a dominating influence over the other by reason of
the affection, trust, and confidence of the latter in the former.’” Mendenhall, 671
N.W.2d at 445 (quoting Estate of Herm v. Henderson, 284 N.W.2d 191, 200
(Iowa 1979)). “Evidence is clear, convincing, and satisfactory where there is no
serious or substantial uncertainty about the conclusion to be drawn from it.” Id.
at 454. “It is a heavy burden.” Miller v. Eisentrager, No. 09-0596, 2009 WL
5126118, at *2 (Iowa Ct. App. Dec. 30, 2009) (citing Jackson, 676 N.W.2d at
605).
On de novo review, we conclude Katherine has not met either burden. To
meet her burden of proving she acted in good faith, Katherine relies mainly on
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her own testimony. She testified that Sylvia insisted on giving her the money,
despite her informing Sylvia that doing so was unnecessary. On cross-
examination, Katherine characterized the transfer as a reimbursement for
services rendered. She did not explain why Kenneth was to receive an equal
amount from Sylvia given he had never provided for Sylvia’s care and had
incurred no costs to be reimbursed for. Her characterization of the transfer is
also contradicted by Sylvia, who testified she understood the transfer to be a gift
that she could get back whenever she wanted. Katherine further admitted she
told Sylvia the money would always be available if Sylvia needed it. Despite this
statement, Katherine transferred some of the money to her children soon after
receiving it from Sylvia then declined to give any of the money back once Sylvia
requested its return.
Katherine also failed to meet her burden to show Sylvia acted freely,
voluntarily, and intelligently. Sylvia was heavily reliant on Katherine and suffered
from dementia or Alzheimer’s when the transfer occurred. As noted before,
Katherine told Sylvia the money would always be available to her after the
transfer occurred. There is no evidence on the record that Katherine ever
explained to Sylvia she intended to gift some of the money to her children and
that at least some of the money would not be available to her soon after the
transfer was completed. The record also shows Sylvia was never informed about
the potential consequences the transfer would have on her eligibility for
Medicaid. On this record, we agree with the district court and conclude Katherine
has not met her burden.
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c. Attorney Fees
Finally, Katherine argues the district court erred by ordering her to pay
Sylvia’s attorney fees and court costs and that Kenneth should pay her appellate
attorney fees. Iowa Code section 633B.116(3) authorizes the district court to
award “reasonable attorney fees and costs to the prevailing party.” The trial
court reviewed the fee affidavit filed by Sylvia’s attorney and determined
awarding Sylvia $7000 was “necessary and reasonable.” “The district court is
considered an expert in what constitutes a reasonable attorney fee.” Boyle v.
Alum-Line, Inc., 773 N.W.2d 829, 832 (Iowa 2009) (quoting GreatAmerica
Leasing Corp. v. Cool Comfort Air Conditioning & Refrigeration, Inc., 691 N.W.2d
730, 733 (Iowa 2005)). “We review the court’s award of attorney fees for an
abuse of discretion.” Id. “Reversal is warranted only when the court rests its
discretionary ruling on grounds that are clearly unreasonable or untenable.” Id.(quoting Gabelmann v. NFO, Inc., 606 N.W.2d 339, 342 (Iowa 2000)). After
reviewing the record we conclude the district court did not abuse its discretion in
awarding Sylvia $7000 for attorney fees and court costs.
Katherine also argues Kenneth should pay $5000 for her appellate
attorney fees. Because Katherine has not succeeded on appeal, we do not
award her appellate attorney fees.
Sylvia asks us to award her appellate attorney fees. See Schaffer v.
Frank Moywer Constr. Inc., 628 N.W.2d 11, 23 (Iowa 2001) (reasoning a statute
that provides for attorney fees also contemplates the award of appellate attorney
fees when the statute does not explicitly prohibit appellate attorney fees). She
does not specify an amount she believes to be reasonable. After reviewing the
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relevant factors, we award appellate attorney fees in the amount of $5000 to
Sylvia. Costs are assessed Katherine.
AFFIRMED.