Heirs cry foul, say two Colorado probate lawyers depleted their estates
POSTED: 01/26/2014 12:01:00 AM MST
Cliff Battista, who was trustee of his father’s estate, said an attorney testified to have him removed, then replaced him on the recommendation of another attorney. (Hyoung Chang, The Denver Post)
Four families with cases in Arapahoe County’s probate court say that two attorneys involved in their estates should have disclosed a real estate investment they made together before charging the estates at least $400,000 in fees.
Colorado’s disclosure requirements for attorneys generally do not extend to family members of clients, experts said. But the attorneys’ joint investment concerned the district’s chief judge enough that he issued an order in April that they could not be involved in the same estate cases without court approval.
Last week, the judge ordered one of the attorneys, court-appointed public administrator Tamra Palmer, to advise him of any cases since April in which she has participated with lawyer Jennifer Gormley. Palmer responded that there are four such cases but that she was appointed to each before the judge’s April order.
Larry Parr carries water he gets from neighbors. A probate lawyer had sold nearby land to someone who later found that a water line crossed his land to Parr’s house and shut it off. “We are living on water we store in 5-gallon buckets,” Parr says. (Hyoung Chang, The Denver Post)
Palmer and Gormley say they are precluded by confidentiality rules from discussing any probate cases. However, each has said they have no conflict of interest. Palmer has told the court the relationship did not influence her decisions and that she had no obligation to disclose her real estate investment with Gormley.
Cliff Battista, who was trustee of his father’s estate, said Palmer testified to have him removed, then, on Gormley’s recommendation, took his place as a court-appointed trustee. Both lawyers then billed the estate for their work on the case.
“I’m appalled that people have the audacity to do that to someone else,” he said.
Offices six steps apart
In July 2010, Palmer, Gormley and a third attorney bought a building for their offices and other tenants in Greenwood Village after borrowing $1.5 million.
Palmer and Gormley pledged houses they own as collateral. They agreed to be jointly and separately liable for the loan. They now work in offices six steps apart.
Colorado’s rules of professional conduct for lawyers forbid representing a client if that creates a conflict of interest.
But the terms defining a conflict leave room for interpretation. For example, a conflict exists if “there is a significant risk” that representation of one or more clients “will be materially limited” by, among other things, “a personal interest of the lawyer.”
The Office of Attorney Regulation Counsel, which governs the conduct of lawyers in Colorado, says judging what constitutes a conflict can be a challenging task, requiring a close examination of the facts involved in a particular case.
In many cases, the rules “are very difficult,” said Jamie Sud-ler, the office’s chief deputy. “What you’re analyzing is what’s in the lawyer’s head.”
A shared business interest doesn’t necessarily create a conflict, he said, and disclosure requirements to clients generally do not extend to family members. Asked about a situation where one lawyer is recommending the other for court appointments or approving the other’s bills and they have made an investment together, “that’s a twist,” Sudler said. “That might make a difference” as to whether a conflict exists.
Palmer responded in an e-mail to questions from The Denver Post. “When I am appointed as a fiduciary, I perform my duties in a neutral and unbiased manner and in accordance with the laws of the state of Colorado,” she said. “I am unable to respond to the perceptions of parties connected to those cases.”
“Because of the law and rules of confidentiality in probate matters, I am restricted from commenting or answering your questions concerning specific probate cases,” Gormley wrote in an e-mail.
She noted that the court is aware of her business relationship with Palmer. “Our ownership in the building is a matter of public record and is not a secret,” she said.
The investment, however, prompted the April order by Arapahoe district court’s chief judge, Rhett Sylvester. And after inquiries by The Post, Sylvester and Timothy Fasing, the district’s probate judge, took additional action.
On Jan. 16, Judge Fasing noted in Palmer’s records “entries reflecting payments to attorney Jennifer Gormley” since April, and he ordered Palmer to explain how that conformed with Sylvester’s order.
The next day, Sylvester issued an order telling Palmer to advise him of any cases since April “that she has dually participated in with attorneys Jennifer Gormley and/or Cheryl Miller,” the third investor in their building.
Palmer responded in writing on Friday that she and Gormley have participated in four cases since Sylvester’s April order, but that her appointment to those cases occurred prior to the order.
“It is my understanding that those cases do not require a stipulation or additional court order,” she said.
Palmer did not receive a copy of the April order until last week, she said, but she had met with Sylvester in April to discuss her business relationships.
“I was not in any way attempting to avoid or circumvent the order. I just wasn’t aware of it,” Palmer said.
Living modest lives
Cliff Battista says his parents, Nick and Rose, led modest lives to save money for their four children.
They clipped newspaper coupons. They overlooked the fraying carpet in their Littleton home. They kept mismatched sets of glasses in the cupboards.
After Rose died, though, Nick grew unhappy with his eldest son, Carl, and disinherited him. When Carl and his sister Cindy Long angrily confronted their father, he disinherited Cindy, too, according to Cliff Battista and his lawyers.
Cindy Long hired Gormley to reclaim her share of the estate. The lawsuit split the family and led to costly litigation.
In court, Gormley alleged that Nick “suffered from an insane delusion” when he created and amended the family trust and that Cliff Battista had unduly influenced him.
Gormley called Palmer as an expert witness, who testified that Cliff Battista had misspent trust funds. Upon Gormley’s recommendation, the judge removed Cliff Battista as the trust administrator and replaced him with Palmer as trustee of a $732,187 estate.
Stanton Rosenbaum, an estate lawyer in Denver, questioned that arrangement.
“That doesn’t pass the smell test. I’m surprised the judge allowed that,” he said. “You’ve got a potential conflict right there.”
Not until last April, when Palmer was required to answer questions in court, did the family get a detailed account of her business relationship with Gormley. By then, much of Nick Battista’s savings had been spent on the legal battle.
Cliff Battista provided documents showing Palmer collected more than $50,000 in fees from the estate in three years.
Cindy Long, who now regrets hiring Gormley, said her attorney and an associate amassed more than $200,000 in fees, then reduced them as part of a settlement.
She is uncertain of her exact payment, but “the pressure of the attorneys’ fees was tremendous,” she said. “It took a toll.”
“They don’t tell people they have this relationship,” said Tina Spencer, the Battistas’ other daughter. “People get caught off guard. Once they get a foot in the door, you can’t get rid of them.”
At the April hearing concerning the attorneys’ joint investment, Palmer denied she had a conflict of interest or an obligation to disclose her investment with Gormley.
“No,” she replied when asked by an attorney for family members about a potential conflict. “I have a job as a fiduciary to do my job as a fiduciary.”
Palmer has served as Arapahoe County’s public administrator for 12 years, a court appointment to distribute the assets of a deceased person who did not designate anyone to do so in his will. She also gets appointed by Judge Fasing as a conservator managing estates of people deemed incapable of handling their own money.
In Colorado, the court administrator’s office oversees the district courts. Carol Haller, its legal counsel, said Judge Sylvester sought her advice before issuing his April order. In general, when attorneys are appointed by a court, “we expect them to act with due regard that they are an arm of the court,” she said. “We expect them to avoid improprieties and even the appearance of impropriety.”
Palmer’s appointments often follow recommendations from the Arapahoe County Department of Human Services, which petitions for guardians and conservators for disabled people, and from Virginia Horton, the assistant county attorney representing the department.
Gormley has entered probate cases as a plaintiff’s attorney, a guardian’s attorney and the attorney for a ward of the court.
Their joint investment dates to July 30, 2010, when a company called Urit LLC bought the 12,882-square-foot ranch-style building at 6060 S. Greenwood Plaza Blvd. for $1.427 million. Urit had borrowed $1.539 million the previous day to facilitate the purchase.
State records list Gormley as the registered agent of Urit LLC. In her court testimony, Palmer said she, Gormley and Miller each own one-third of the building.
“They spent his money”
Edward J. Baker enlisted in the Navy right out of high school in Illinois and retired as a lieutenant commander and master scuba diver with dozens of medals and commendations for his service, which included classified missions.
In 2007, he suffered a stroke and two years later went to live with a sister in Colorado while getting rehabilitation treatment. In 2010, the county human services department successfully petitioned the probate court to make him a ward of the court. The rehabilitation center chose Gormley as Baker’s attorney, and Palmer was appointed conservator of his assets, according to Carol Fox, Baker’s sister in Illinois.
Fox said when Baker visited his daughter in California, his court-appointed protectors — including Gormley, Palmer and a guardian — obtained an emergency court order forcing him back to Colorado. Repeatedly, “they spent his money to oppose him in court,” she said.
Baker, 55, now lives in a single room in an assisted-living house. He said he was told after a recent court hearing that he will be allowed to move to California after all.
“They got a group there, and they just keep it within the group,” he said of Arapahoe County’s probate court. He attributes his loss of freedom to partial paralysis from his stroke, which he said no longer affects his mental capabilities.
Baker tried to have Gormley replaced as his lawyer. But Horton, the assistant county attorney, and Baker’s court-appointed guardian objected, saying he was incompetent to choose a new lawyer.
“Ed misses his family terribly,” said Fox, who calls him every day. “It’s so sad.”
In court hearings, she said, “nobody would let him speak.”
Palmer’s expense reports, which she submits to the court for approval, show that in two years, she received $58,927 and Gormley received $79,870 from Baker’s estate. Those fees, as well as payments to other lawyers, Baker’s guardian and the facilities where he was kept, exhausted nearly all of a $637,640 estate from 2010 to 2012.
In her reports, Palmer attributed many expenses to extensive litigation with Baker’s sister in Colorado.
Palmer charged $210 an hour for her services, a rate approved by the court that several local probate attorneys said was a reasonable charge.
In 2012, according to court records, she served as conservator, trustee or personal representative of a deceased person for 87 estates in the judicial district and charged a total of $319,851 in fees and costs.
Worried about scams
Eleanor Lewis held an estate valued at nearly $2 million when, at the age of 82, she began to show signs of dementia. Family members and friends worried she had become vulnerable to financial scams.
She was living with a grandson in her home of 50 years, and other family members offered to help care for her. But the county human services department proposed a professional guardian and conservator. A court-appointed lawyer agreed. Valerie Crider became Lewis’ guardian. Palmer, who had started helping one of Lewis’ sons manage her money, took over as conservator.
Two of Lewis’ other children said that when they objected to their mother’s care, alleging she was being drugged unnecessarily, Crider restricted their ability to visit their mother in their childhood home. Crider also required a supervisor to be present during visits, raising the costs of care, they said, and hired Gormley to defend her guardianship work.
Crider said she could not discuss the case because it is confidential.
Lewis’ remaining assets include a ranch in Elbert County bought by her husband, who died before he could retire there.
Janet Van Vliet, one of Lewis’ daughters, provided a spreadsheet of expenses derived from Palmer’s interim accounting reports from 2009 until early 2013, along with the reports. Those showed Palmer had received $36,000 in fees, while more than $210,000 was spent on guardianship services and reimbursements. About $41,000 of the guardianship charges went to Gormley in one year.
In all, the costs charged to the Lewis estate, which also included 24-hour care and ranch maintenance, totaled $1.3 million.
Van Vliet said Palmer recently notified the family that the ranch will be sold to pay for their mother’s continued care.
“It was just shocking every time we would get a report,” she said.
Chester “Skip” Morgan represented three of Lewis’ children fighting the restrictions on their ability to visit their mother. “It was troubling” to learn that Palmer and Gormley had a joint real estate investment, he said.
Gormley and Horton “presented a united front,” he said, “on behalf of Valerie Crider and Tamra Palmer, who involved herself in the visitation issue and litigated, even though she was the conservator.”
Horton also said she could not discuss individual cases. In general, she said, Palmer is one of several people nominated as conservators because she is experienced and charges a modest hourly rate.
“I have never nominated Jennifer Gormley to serve as a fiduciary,” she said, “(and) neither Ms. Gormley nor Ms. Palmer is a personal friend.”
Horton and Haley McKean, a spokeswoman for the county human services department, said families are sometimes to blame for driving up the costs of a probate case.
“The more conflicted, the more pleadings, the more the fees of the professionals increase,” Horton said.
McKean said family members can abuse or harm at-risk adults, although she was not speaking about the Lewis case. “Relatives can be toxic,” she said.
Larry Parr grew up on Arapahoe County farmland that, over decades, turned into light-industrial acres off Santa Fe Drive. His mother, Emma, held an estate worth $850,000.
Parr, who still lives on the land and owns a recreational-vehicle storage business there, said his inheritance dwindled quickly after he complained about a guardian’s treatment of his mother, and the guardian hired Gormley.
The conflict climaxed when he withheld payments to the facility she lived in, alleging improper care. Gormley petitioned the court for an emergency order, saying Parr’s mother was about to be evicted.
In 2011, “Gormley suggested to Judge Fasing to relieve me as trustee of the estate and to appoint Tamra (Palmer) in my place,” Parr said, and Fasing did.
With court approval, Palmer sold family land along Union Avenue in Englewood to a competing business, landlocking Parr’s site, he said. The new owner found that a water line crossed his land to Parr’s house and shut the water off on Thanksgiving Day.
“We are living on water we store in 5-gallon buckets that we get from our neighbors,” he said.
Parr appealed unsuccessfully to Fasing to have Palmer removed as conservator and trustee of his mother’s estate.
He has been unable to find out the total amounts Palmer charged, but said he has paid more than $200,000 in legal fees.
On Jan. 16, Gormley petitioned the court for payment of $203,260 in fees and costs accumulated by Emma Parr’s guardian and Gormley’s office. The court has not yet acted on the petition.
A look at the players in estate cases:
Probate court judges: Oversee estate cases and appoint conservators and guardians for wards of the court.
Wards:Are deemed in need of protection because they are incapacitated, at risk of abuse or under disability.
Guardians: Are appointed by the court to protect the health and welfare of a ward. A guardian can be a family member or a professional guardian.
Conservators: Are appointed by the court to manage the finances and assets of a ward. A conservator can be a family member or a professional conservator.
Public administrators: Are court appointees who may be asked to distribute a deceased person’s estate as its personal representative when no will exists, when no family member is willing and available to serve as executor, or when a will is contested. A public administrator also may be appointed to manage a ward’s financial affairs.