 Court Update
Recent Court Decisions of Interest in Family Law Court of Appeals of Ohio-Tenth District: Final Judgment Made in Guardian/Estate Case Art v. Erwin (5/17/2011) On May 17, 2011, a thirteen-year legal battle was resolved by the Ohio Court of Appeals ,which involved a conflict alleging that a guardian and brokerage firm concealed assets of a ward's estate. The situation began on October 11, 1997, when Katherine A. Guzay suffered severe injuries as a result of a serious automobile accident. Her injuries were extensive and included traumatic brain injuries, which required her to be under around-the-clock care. Her injuries also caused dramatic memory loss. Guzay's daughter, Davis A. Erwin, was granted her application as guardian to Guzay and her estate. After the initial hearing, the magistrate concluded that Guzay had a brokerage account totaling $200,000 at the brokerage firm Butler Wick. The probate court adopted the magistrate's decision on December 12, 1997 and also issued Guzay the letters of guardianship. These letters stated "Notice to Financial Institutions- Funds being held in the name of the within named ward shall not be released to the Guardian without a Court Order directing release of a specific fund and amounts thereof." The next major event occurred on December 15, 1997, when an electronic request was made to have Guzay's cash and securities transferred into another account at National Financial Services Corporation (NFS), another brokerage firm. During this time, NFS acted as a clearing broker for Eisner Securities and consequently carried accounts for Eisner clients. Joseph Erwin, Guzay's son-in-law and Davis' husband, worked as a branch manager of Eisner's Columbus office from June 1997 to September 2000. It is then reported that Joseph opened an account in the name of Davis A. Erwin, Guardian for Katherine A. Guzay, with NFS. On December 18, 2011, NFS completed the electronic request and transferred all of the securities in Guzay's account to the new NFS account created by Joseph. As time went on, Joseph regularly moved money from this account in small increments directly into his personal Bank One account. He also transferred cash units of the bank account into his National City Bank checking account and forged Guzay's name on several checks. Between December of 1997 and May of 1999, Joseph had stolen $198,766.61 from Katherine A. Guzay. In addition, he embezzled over $2.5 million from Eisner clients. Joseph was able to conceal his deceit from Davis and the courts by providing fraudulent NFS account statements to the attorney. The FBI began to investigate Joseph and his "handlings" of Eisner clients' assets, after Eisner terminated his employment. Joseph continued to evade orders for him to verify the true financial state of Guzay's accounts. In February 2001, the probate court assigned Andrew J. Art as the new guardian of Guzay and her estate. Art then filed a complaint in the probate court alleging concealment of Guzay's assets. This complaint was against all parties involved, including Joseph, Davis, Eisner, Bank One, National City Bank and Butler Wick. On June 18, 2002, the probate court approved the judgments on the basis that Davis had failed to exercise any care or responsibility as guardian of her mother's estate, and was therefore liable for the losses incurred due to Joseph's theft and forgery. The court charged Davis $271,415.51, plus interest. Afterwards, the court approved certain settlements in the case and all of the defendants were dismissed except for Joseph, Davis, Butler Wick and National City Bank. After continued disputes and motions, the case finally reached the Ohio Court of Appeals. As the court reviewed the case, it analyzed several factors. The Court cited the decision in Wozniak v. Wozniak (1993) that "a financial institution impermissibly disposes of an estate assets if it conveys an estate in its possession to an unauthorized individual." In addition, under R.C. 2109.52, in order to prove a financial institution was at fault, (in this case Butler Wick) the opposing party must establish that the financial institution made a conveyance (transfer of ownership) of assets belonging to the trust estate to a party unauthorized to take possession of the assets. The Court also examined whether Davis, as Guzay's guardian, was actually authorized to take possession of the transferred estate's assets. The court explored multiple precedents and rules, including R.C. 2111.50(A)(2)(b), stating, "a guardian does not possess complete dominion over the ward." Inthe case Guardianship of Spangler, "because the probate court is the superior guardian, the appointed guardian is simply an officer of the court subject to the court's control, direction and supervision. " The letters of guardianship given to Davis after being appointed guardian, also limit the authority she has to take possession of estate funds held in the name of the ward. Butler Wick fought to defend its position asserting, "the letters of guardianship are an enforceable order, the language of that order does not impose a duty on financial institutions to control disbursements to a guardian." The Ohio Court of Appeals disagreed. After deliberation, the Ohio Court of Appeals ruled on May 17, 2011, that Butler Wick should in fact be held liable for conveying away assets under R.C. 2109.52. The court further stated that Davis had no knowledge of the money transfer that her husband, Joseph, had initiated. The case was remanded to the trial court for further proceedings. |
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