Virginia Lawyers Weekly//October 31, 2023//
Where
a conservator did not report some of the decedent’s accounts to the
commissioner of accounts and made “questionable disbursements” from one
of them, the trial court “did not err in confirming the Commissioner’s
report and entering a final order forfeiting [the conservator’s] bond.”
Overview
Wilder
was married to Thelma Wilder. They had three children: Eric, Brian and
Cynthia. The trial court determined that Wilder was an incapacitated
adult and appointed Minor, Wilder’s granddaughter, as his estate’s
conservator.
The trial court explained that a conservator was
needed “based on ‘the financial dissipation conducted by Brian Wilder
and allowed by Mrs. Thelma Wilder.’” Minor was appointed conservator and
posted a $1.2 million bond.
Minor
did not disclose five of the Wilder’s join bank accounts on her estate
inventory “as well as an additional bank account Mr. Wilder held with
Burke & Herbert Bank identified as ‘-4200’ (‘Account -4200’).
“It was this undisclosed bank account that gave rise to this appeal. …
“On
October 15, 2018 — just three days after her appointment as Mr.
Wilder’s temporary guardian and conservator — Minor opened Account -4200
with funds Mr. Wilder already maintained in another account —
identified as ‘-4197’ — with Burke & Herbert Bank (‘Account -4197’).
During the latter part of 2018 and 2019, Minor made a number of
questionable purchases with funds from Account -4200.”
Eric,
later joined by Cynthia, alleged that Minor had underreported the
assets of Wilder’s estate. Eric asked the commissioner for a hearing and
also requested “production of certain bank records, including records
from Burke & Herbert Bank.”
A
hearing was convened on Dec. 5, 2020, and then postponed to Jan. 5,
2021, “because the Commissioner had received documents and allegations
which indicated the potential for forfeiture of the surety bond, and she
wanted the surety on Minor’s bond to appear as well.”
Before the hearing was adjourned, “Minor confirmed the existence of the undisclosed Account -4200.
“In
anticipation of the January 5 hearing, counsel for Minor filed a
hearing brief, asserting, among other arguments, that Eric and Cynthia
were not ‘interested parties’ within the meaning of Code § 64.2-1209,
and therefore the proceeding was improper.”
Eric’s counsel was allowed to respond, both before and during the Jan. 5 hearing.
The
commission subpoenaed bank records from Burke & Herbert. “The
bank’s response reflected both statements from Account -4197, which
accurately reflected and accounted for transactions spent on Mr.
Wilder’s guardianship and his estate, and from Account -4200,
transactions for which Minor never accounted.
“Finally,
on February 3, 2021, the Commissioner convened the hearing concerning
the objections of Eric and Cynthia for the third time. … However, no
report or further action was taken by the Commissioner as a direct
result of these investigatory hearings.”
The
commissioner asked Minor for “documentation explaining the propriety of
the expenditures from Account -4200. … The Commissioner determined that
Minor’s response was insufficient[.]” When Minor did not file “a proper
final account,” the commissioner filed a “report of noncompliance” with
the trial court.
The
trial court issued a show cause summons. Minor’s counsel argued the
proceeding was “a nullity” and claimed the commissioner “was not an
impartial adjudicator.” The court order the commissioner to conduct a
hearing and determine where Minor should be removed as conservator and
whether the bond should be forfeited.
Minor
did not attend the hearing. Her counsel did not provide evidence to
explain “to explain how the funds from Account -4200 were used to
benefit Mr. Wilder.”
Counsel
also argued Minor was denied due process because the commissioner was
“acting both as a prosecutor and as an adjudicator, and she again argued
that the proceedings were a ‘nullity’ because they were instituted by
Eric and Cynthia, both of whom lacked standing as ‘interested person[s]’
under Code § 64.2-1209.
“Counsel
for Minor and for Liberty Mutual also argued in the alternative that
the amount that they ought to be liable for was far less than the
$574,462.27 that the Commissioner asserted.”
The
trial court affirmed the commissioner’s report, which recommended
Minor’s removal and forfeiture of the bond. Minor appealed.
Hearing process
“Appellants’
first assign error to the trial court’s ruling by arguing that the
entire proceeding was a ‘nullity’ because it was instituted by Eric and
Cynthia. …
“Appellants
argue that, because Eric and Cynthia were not ‘interested persons’
under the statute, ‘the only thing the Commissioner could do with the
objections before her would be to dismiss the objections for lack of
standing.’ …
“[W]e
agree with the trial court that ‘while [Code § 64.2-1209] does
prescribe a method by which the Commissioner can have a hearing, the
statute does not say that is the only way a commissioner may conduct a
hearing.’”
The
commissioner has “the duty and authority to ensure the correct
administration of estates.” By statute, the commissioner has ‘the power
to subpoena “any person to appear before them.”’
“The
record demonstrates that that is what occurred here, and we see no
issue with that process. The investigatory hearings that appellants
complain of were well within the Commissioner’s ‘supervisory’ authority
…. and her authority to require ‘any person’ to appear before her[.] …
“Further, the Commissioner was carrying out her statutory obligation to ensure Minor made a ‘complete and proper account.’”
Neutral arbiter
“Appellants
seize upon several statements made by the Commissioner during the
investigatory hearings wherein she intimated that, notwithstanding the
fact that Eric and Cynthia may not be ‘interested persons’ …, she,
herself, was an ‘interested person’ for purposes of the hearing, that
she ‘had standing in the case,’ and that she was not ‘neutral.’
“Appellants
argue that these statements evince bias on the part of the Commissioner
and that the hearing process, in turn, violated their due process
rights. …
“[T]he
record makes clear that the Commissioner, in making the assertions that
she was ‘interested,’ ‘had standing’ in the case, and was not
‘neutral,’ merely intended to express the fact that she, as Commissioner
of Accounts, had a duty to assess the evidence presented to her and
ensure the proper administration and distribution of Mr. Wilder’s
estate. …
“The
Commissioner’s statements do not render her an impartial adjudicator.
In fact, the trial court came to this very conclusion[.] …
“The
trial court further acknowledged that ‘although the words that she used
might not have been the most artful words to use in that context, [she
was saying] that the Commissioner of Accounts had duties and
obligations.’ …
“[A]ppellants
argue that the Commissioner violated their due process rights by
exercising both ‘enforcement’ and ‘adjudicatory’ authority. …
“The
Commissioner makes findings of fact and conclusions of law in her
report, which, upon submission to the trial court, are merely
recommendations which the trial court may accept or reject.”
Remedy
Appellants argue that Eric and Cynthia’s “remedy was limited to a suit to surcharge and falsify under Code § 64.2-1213. …
“The
trial court’s order and rulings were not made on behalf of Eric and
Cynthia, as ‘interested persons’ proceeding pursuant to Code §
64.2-1209.
“In
fact, neither Eric nor Cynthia were parties to the instant case; they
received no judgment or remedy, and their legal rights were not affected
in any way by the trial court’s ruling.
“Therefore,
any arguments related to what remedies may or may not have been
available to Eric and Cynthia are not relevant to the instant case.”
Affirmed.
Minor,
et al. v. Heishman, Record No. 0980-22-4, Oct. 10, 2023. CAV (published
opinion) (Fulton III) From the Circuit Court of Fairfax County (Smith).
Joseph W. Stuart for appellants. Robert B. McEntee, III, Assistant
Attorney General (Jason S. Miyares, Attorney General, on brief), for
appellee. Amicus Curiae: Virginia Conference of Commissioners of
Accounts (John K. Cottrell; Cottrell Fletcher & Cottrell PC, on
brief), for appellee. VLW 023-7-396, 30 pp. Source:
Bond forfeited in conservatorship case - Virginia Lawyers Weekly
