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The authors have taken the rules and regulations of the brokerage industry and put them in laymen’s terms. -- Professor William C. Tyson, The Wharton School & The Law School of the University of Pennsylvania


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ALBUQUERQUE JOURNAL - GUARDIANSHIP LEGAL BATTLE . . .

https://www.abqjournal.com/1054100/guardianship-legal-battle-ends-in-secrecy.html

Guardianship legal battle ends in secrecy

By Colleen Heild / Journal Investigative Reporter

Sunday, August 27th, 2017 at 12:05am

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Copyright © 2017 Albuquerque Journal

A daughter’s claims of excessive billing and millions of dollars of mismanagement by her mother’s corporate guardian/conservator were secret from the start. During four years of litigation, virtually all of the court case was sealed from public view.

Now the professional malpractice lawsuit – a rare case against a New Mexico court-appointed professional guardian/conservator – has ended with a secret out-of-court settlement.

The settlement came a month after the judge in the case reversed himself and opened up court files in response to a motion by the Albuquerque Journal. The terms of the settlement weren’t revealed publicly.

Without a public trial, which was set for October, the opportunity to learn more from Leonie Rosenstiel’s case against Decades LLC of Albuquerque appears all but lost, just as a commission appointed by the state Supreme Court is looking for ways to reform the system.

Nancy Oriola, founder of Decades, told the Journal on Friday that the settlement was “an economic decision by the insurance companies that I agreed to. Otherwise, I feel I had a very strong case.”

Rosenstiel, in a statement, told the Journal she believes she would have won at trial.

“However, I’m happy about the settlement, because I can now move on to other things. I am especially glad that the record of this case has been opened for all to see. It’s my hope that these sorts of cases become more transparent in the future. I’m deeply concerned that all the unwarranted secrecy has led to the perception among people caught in the system that commercial guardians and conservators are favored by the courts.”

Rosenstiel, the daughter of a New York financier, was an only child, and the personal representative for her mother, Annette Rosenstiel.

Annette Rosenstiel, who died in 2012, was a published author and lecturer who held a Ph.D. in anthropology.

After her father died and her mother began to show signs of dementia, Leonie sought to become guardian for her mother, but ultimately agreed to the appointment of Decades as both the guardian to make decisions on her mother’s daily care and as conservator tasked with overseeing her mother’s finances.

Rosenstiel’s lawsuit in 2013 alleged that over a nine-year-period, Decades “abused their position” as the appointed guardian and conservator for her mother, who died at the age of 100.

“The alleged abuse took multiple forms,” her complaint stated. She contended that Decades breached its fiduciary duty by negligently handling her mother’s assets and charging “astonishing expenses” for her mother’s care, which included nearly $250,000 in legal fees.

Rosenstiel’s securities expert estimated that her mother’s estate lost at least $10 million under Decades’ oversight, in part because the conservator firm failed to diversify her concentrated stock in New York Mercantile Exchange Holdings until after a dramatic drop in value.

Decades sought to disqualify that expert, maintaining that the firm had acted prudently, had no duty to act, and was bound by a court ruling that required prior court approval for any re-allocation of assets.

Leonie contended that the annual reports Decades was required to provide by law to the court didn’t provide enough information for Leonie to ascertain the status of her mother’s finances.

Only when Leonie went to court herself in November 2007, alleging mismanagement by Decades, did the company take steps to diversify the stock, she alleged. Then, six months before her mother’s death, Decades asked the judge in the case to relieve it of “all liability” in the performance of its duties from November 2008 to December 13, 2011, her lawsuit stated. Decades, in its answer, denied that allegation .

Decades stated that, after Annette’s death, her estate still had a total asset value of more than $5.6 million, “which was net of years of expensive in-home care, guardianship and conservatorship expenses and hundreds of thousands of dollars of gifts” to her sole heir, Leonie.

Leonie Rosenstiel was “clearly disappointed that she has not inherited as much as she would have liked. …,” Decades’ attorney said in one filing.

Oriola told the Journal she had several experts who would have testified that her company provided “excellent” care to Rosenstiel. She also said the “estate did benefit by more than $6 million after her death. In our opinion we did well by Dr. Rosenstiel.”

Rosenstiel’s securities expert Douglas Schulz concluded that Decades had “neither the expertise or experience in how to deal with diversifying and hedging” such a large concentrated asset. For Decades to say there are no damages to the estate, “is like trying to take credit for the sun coming up in the morning because you happen to be on your porch watching,” he wrote in a report.

In the civil lawsuit against Decades, state District Judge Alan Malott rendered only one substantive ruling on the lawsuit’s allegations. In May 2016, he denied a Decades motion to dismiss Rosenstiel’s claim that Decades had been negligent in failing to diversify.

“There are genuine issues of material fact in dispute as to whether or not Decades LLC exercised due care and appropriate prudence in not seeking the Court’s permission to re-allocate Ms. Rosenstiel’s (New York Mercantile Exchange) stock until late 2007,” Malott wrote.

Closed from public view

For part of the case, the two sides argued over whether the filings in the case should be sealed from public view. Under state law, guardian/conservator court proceedings are closed to the public and all records filed in the case are sealed.

Decades argued that records in Rosenstiel’s civil case should also be sealed, because her allegations referenced the guardianship matter. The company stated that it welcomed “scrutiny” but added, despite “Defendants’ desire for public vindication in its 10 plus year battle with Plaintiff, it is still constrained to respect Annette Rosenstiel’s privacy.”

After various filings were sealed initially, Malott in 2014 imposed confidentiality on all further filings related to the guardian/conservator case, adding, “The Court further bemoans the ongoing level of vitriol which counsel feels is appropriate in furtherance of these proceedings.”

Guardianship matters are shrouded in secrecy – even after the incapacitated person is dead – and Malott’s initial sealing order was upheld by the Supreme Court after Rosenstiel’s lawyers appealed.

But when the Journal asked Malott to reconsider this summer, Malott on July 10 rescinded his order. He concluded that Leonie Rosenstiel, as personal representative, had the authority to waive confidentiality.

One month earlier, Malott ruled against Rosenstiel in finding there were no grounds to force his recusal on the case. Rosenstiel’s attorney David Garcia argued that the judge had an appearance of bias when he criticized news coverage of guardianship issues and defended the guardianship industry at an Albuquerque Lawyers Club panel earlier this year.

Malott, in that ruling, made it clear he didn’t want lawyers talking about the case publicly.

“The parties and counsel are reminded the appropriate place for the trial is in the Bernalillo County Courthouse, not the “Court of Public Opinion,” Malott wrote.

Until an Aug. 7 mediation, court records show both sides were continuing to spar. Decades also challenged the fact that one of its insurance companies had failed to defend the company in the case.

Decades was founded in 2001 and provides comprehensive elder care services in New Mexico, according to its website. The company has been appointed by judges in more than 70 guardian/conservator cases since 2004, state court records show.