In re the Interest of Black , 422 P.3d 592 ( 2018 )

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.
SUMMARY
January 25, 2018
2018COA7
No. 16CA198 In the Interest of Black — Probate — Persons
Under Disability — Conservators — Fiduciary Duties —
Conflicts of Interest
In this conservatorship case, appellant Bernard Black, the
former conservator of his mentally-ill sister, appeals the probate
court’s order finding that he breached his fiduciary duties and
committed civil theft by converting his sister’s assets for his own
benefit.
Construing section 15-14-423, C.R.S. 2017, which allows a
fiduciary to engage in a conflicted transaction under certain
circumstances, a division of the court of appeals holds that this
provision applies only when the fiduciary has disclosed the conflict
of interest and demonstrated that the conflicted transaction is
nonetheless reasonable and fair to the protected person. Because
Black did neither, he cannot seek safe harbor under the statute.
The division also holds that the probate court had jurisdiction
to resolve the civil theft allegations and to impose civil theft
damages, that Black had notice of the allegations against him and
the remedies sought, and that the hearing was otherwise fair.
Accordingly, the division affirms the probate court’s order.
COLORADO COURT OF APPEALS 2018COA6
Court of Appeals No. 16CA0198
City and County of Denver Probate Court No. 12PR1772
Honorable Elizabeth D. Leith, Judge
In the Interest of Joanne Black, Protected Person,
Appellee and Cross-Appellant,
v.
Bernard Black, in his Capacity as Trustee for the Supplemental Needs Trust for
the Benefit of Joanne Black,
Appellant and Cross-Appellee.
ORDER AFFIRMED AND CASE
REMANDED WITH DIRECTIONS
Division VI
Opinion by JUDGE HARRIS
Furman and Berger, JJ., concur
Announced January 25, 2018
Holland Hart LLP, Christina Gomez, Matthew S. Skotak, Morgan M. Wiener,
Denver, Colorado, for Appellee
Davis Graham Stubbs LLP, Shannon Wells Stevenson, Paul D. Swanson,
Denver, Colorado, for Appellant
¶1 Bernard Black is the former conservator for his sister, Joanne
Black. The probate court found that Mr. Black breached his
fiduciary duty by converting Joanne’s1 assets for his own benefit.
Based on its findings, the court surcharged Mr. Black in the
amount of the converted funds and then trebled those damages
under the civil theft statute.
¶2 Mr. Black’s primary argument on appeal is that he could not
have breached his fiduciary duty because the conflicted transaction
that resulted in the conversion of his sister’s assets was disclosed
to, and approved by, the probate court. But we are not persuaded
that Mr. Black complied with his obligations under section 15-14-
423, C.R.S. 2017, the statute that he contends provides him safe
harbor.
¶3 Nor are we persuaded that the court erred in finding Mr. Black
liable for civil theft or that the evidentiary hearing was so unfair as
to require reversal.
¶4 Accordingly, we affirm the probate court’s order.
1 For ease of reading, we refer to Ms. Black by her first name.
1
I. Background
A. Factual Background
¶5 The Black siblings’ mother died in New York in 2012. Mr.
Black believed that his children would inherit one-third of mother’s
entire estate. But his belief was mistaken.
¶6 Joanne suffers from chronic schizophrenia and cannot
manage her own financial affairs. To account for Joanne’s
condition, mother created a special needs trust (the SNT) and, in
her will, devised two-thirds of her estate to the SNT. The remaining
one-third of the estate was devised to a trust for the benefit of Mr.
Black and his children (the Issue Trust).
¶7 The bulk of mother’s estate consisted of multiple accounts,
including a Roth individual retirement account (Roth IRA), with a
total value of approximately $3 million. Mr. Black expected that,
upon mother’s death, the $3 million would become part of the
estate and be distributed to the SNT and the Issue Trust. But
shortly before her death, mother designated the accounts as
payable-on-death (POD) directly to Joanne. (More precisely, mother
left 95% of the value of the accounts to Joanne and 1% to each of
Mr. Black’s five children from his first marriage. The Roth IRA was
2
left entirely to Joanne.) That left only the residual estate to be
divided two-thirds to Joanne and one-third to Mr. Black and his
children.
¶8 The discovery that he and his children had mostly been cut
out of $3 million of mother’s estate did not sit well with Mr. Black.
Nor did it sit well with Mr. Black’s second wife, with whom he had
two children. Mr. Black’s wife, along with his older children,
threatened to mount a legal challenge to the validity of mother’s
POD designation.
¶9 As Mr. Black saw it, the situation presented only two options:
his family could litigate the POD designation, or he could figure out
another way to get what he considered to be his fair share of the
money. But either way, as Mr. Black candidly admitted at the later
evidentiary hearing, his goal was to “get the POD assets back into
the estate.”
¶ 10 Mr. Black, a tenured law professor who has written on the
subject of corporate directors’ fiduciary duties, decided that the best
course of action was to seek appointment as Joanne’s conservator.
3
Then, acting on Joanne’s behalf, he could “disclaim”2 the money in
the POD accounts, and the money would revert to the estate and be
distributed two-thirds to the SNT and one-third to the Issue Trust.
In this way, Mr. Black later explained, he could unilaterally correct
the “mistake” made in mother’s designation of the POD accounts
without enduring intra-family litigation.
B. Procedural Background
¶ 11 Joanne had been a longtime resident of New York. But at the
time of mother’s death, Joanne was in Denver, homeless and in a
deteriorated state. Thus, Mr. Black initiated the conservatorship
action in the probate court in Denver. In his petition, he told the
court that Joanne’s approximately $3 million in assets were at risk
of being “wasted or dissipated” because mother had “inadvertently”
2 To “disclaim” means to refuse to accept an interest in property.
§ 15-11-1202(3), C.R.S. 2017. A fiduciary may disclaim an interest
in property on behalf of another. § 15-11-1205(2), C.R.S. 2017.
Generally, if an interest in property is disclaimed, “the disclaimed
interest passes as if the disclaimant had died immediately before
the time of distribution,” § 15-11-1206(2)(c)(II), C.R.S. 2017, unless
the instrument creating the interest provides otherwise, § 15-11-
1206(2)(b). The parties appear to agree that once Mr. Black
disclaimed Joanne’s interest in the POD accounts, those accounts
became property of mother’s estate, to be distributed pursuant to
the terms of her will.
4
designated the accounts as POD to Joanne, rather than routing the
funds through the SNT. In support of his petition, Mr. Black
emphasized that the “assets need to be secured.”
¶ 12 After a hearing on the petition in December 2012, during
which Mr. Black first proposed the disclaimer as a method for
securing the assets, the probate court appointed Mr. Black as
Joanne’s conservator. The order of appointment authorized the
conservator to disclaim Joanne’s interests in the POD accounts and
further provided that “[Joanne’s] assets will be placed into a
Supplemental Needs Trust for [Joanne’s] benefit.”
¶ 13 Mr. Black promptly executed the disclaimer. Pursuant to his
plan, the POD assets (with the exception of the Roth IRA) were then
redistributed two-thirds to the SNT and one-third to the Issue
Trust. As for the $300,000 Roth IRA, Mr. Black simply moved those
funds into new accounts in the name of his children.
¶ 14 Questions about the propriety of the disclaimer were first
raised two years later. By that time, Joanne had returned to New
York and parallel guardianship proceedings had been initiated in
that state. During the course of those proceedings, and in response
5
to Joanne’s inquiries, Mr. Black admitted that he had diverted
approximately $1 million of the POD assets to the Issue Trust.
¶ 15 Joanne’s court-appointed counsel filed a motion to void the
disclaimer. Counsel argued that Mr. Black’s diversion of one-third
of the POD assets was “antithetical to the terms and intent of
[mother]. All of this money was meant for [Joanne’s] care and
benefit.” Counsel alleged that, in failing to “preserve and maintain
[Joanne’s] assets for her sole benefit,” Mr. Black had breached his
fiduciary duty as Joanne’s conservator.
¶ 16 At a subsequent status conference, the court approved a
request for an independent accounting of Joanne’s assets and
scheduled an evidentiary hearing to resolve the issue of whether Mr.
Black had properly disclosed his intent to redirect one-third of
Joanne’s POD assets to Mr. Black’s children and whether the
disclaimer gave Mr. Black the authority to do so. The court advised
the parties that it would consider whether “disgorgement or
unwinding of fiduciary actions” was appropriate.
¶ 17 Shortly before the first day of the evidentiary hearing, Joanne’s
guardian ad litem (GAL) filed a motion alleging that Mr. Black’s
6
conduct amounted to civil theft and requesting that the court award
treble damages.
¶ 18 The evidentiary hearing occurred over the course of four days,
from June to September 2015. Following the hearing, the court
issued a written “hearing order” finding that Mr. Black had
breached his fiduciary duty to Joanne. Specifically, the court
concluded that Mr. Black had failed to adequately disclose his
intent to use the disclaimer to divest his sister of one-third of the
POD assets and, therefore, he did not have the court’s authorization
to redirect the assets. Mr. Black’s actions in redirecting the funds
were “deceptive and undertaken in bad faith,” the court determined,
and his conduct satisfied the elements of civil theft. Accordingly,
the court “surcharged” — or, ordered reimbursement by — Mr.
Black in the amount of $1.5 million, the value of the improperly
diverted assets, including the Roth IRA. Then, under the civil theft
statute, it trebled the damages.
II. Jurisdictional Issues
¶ 19 We begin by addressing Mr. Black’s jurisdictional challenges
to the court’s hearing order. First, he contends that the probate
court lacked jurisdiction to enter the hearing order because any
7
challenge to the disclaimer had to be brought under C.R.C.P. 60,
the procedural mechanism for attacking a final judgment. And
second, he says that he did not receive sufficient notice that the
evidentiary hearing was a “surcharge proceeding.”
¶ 20 When resolution of a jurisdictional issue involves a factual
dispute, we apply a clearly erroneous standard of review. Tulips
Investments, LLC v. State ex rel. Suthers, 2015 CO 1, ¶ 11. But
when there are no disputed facts, the determination of a court’s
subject matter jurisdiction presents a question of law we review de
novo. Id.A. The Motion to Void the Disclaimer
¶ 21 Mr. Black argues that only a Rule 60(b) motion — not a
motion to void the disclaimer — could undo the court’s order
authorizing the disclaimer.
¶ 22 True, a final judgment may be vacated only as provided for in
C.R.C.P. 60. In re Marriage of Scheuerman, 42 Colo. App. 206, 208,
591 P.2d 1044, 1046 (1979). But the motion to void the disclaimer
did not seek relief from a final order. Instead, the motion alleged
that Mr. Black had breached his fiduciary duties to Joanne while
acting as conservator, and it sought to unwind a transaction based
8
on this breach. Levine v. Katz, 167 P.3d 141, 144 (Colo. App. 2006)
(“[I]t is the facts alleged and the relief requested that decide the
substance of a claim, which in turn is determinative of the existence
of subject matter jurisdiction.”) (citation omitted).
¶ 23 Thus, the probate court’s jurisdiction to conduct a hearing
regarding a possible breach of Mr. Black’s fiduciary duties and to
enter the hearing order (which, we note, did not unwind the
transaction) was based not on Rule 60 but on the court’s authority
to monitor fiduciaries over whom it has obtained jurisdiction. See
§ 15-10-501, C.R.S. 2017. Pursuant to section 15-10-503, C.R.S.
2017, the probate court has authority, either by petition or on its
own motion, to address alleged misconduct of a fiduciary.
Accordingly, the court had jurisdiction to adjudicate the allegations
and issues raised by the motion to void the disclaimer.
B. Notice of Surcharge Proceeding
¶ 24 Mr. Black further contends that the court lacked subject
matter jurisdiction because he did not receive sufficient notice of
the surcharge proceeding.
9
¶ 25 Section 15-10-504, C.R.S. 2017, sets forth remedies, including
imposition of a surcharge, against a fiduciary who has breached his
fiduciary duties:
(2) Surcharge. (a) If a court, after a hearing,
determines that a breach of fiduciary duty has
occurred or an exercise of power by a fiduciary
has been improper, the court may surcharge
the fiduciary for any damage or loss to the
estate, beneficiaries, or interested persons.
Such damages may include compensatory
damages, interest, and attorney fees and costs.
See also § 15-10-503(2)(g) (listing remedies available for fiduciary’s
breach of his duties, including “[a] surcharge or sanction of the
fiduciary pursuant to section 15-10-504”). Under section 15-10-
401, C.R.S. 2017, the fiduciary must receive notice by mail of the
time and place of the surcharge proceeding fourteen days before the
hearing.
¶ 26 We are not convinced that the notice was statutorily deficient.
The court bifurcated the proceedings into a liability phase and a
damages phase. On August 6, after the conclusion of the liability
phase, the court issued a minute order, explaining that the next
hearing, set for September 8, would address the issues of surcharge
10
and civil theft. Thus, Mr. Black had more than fourteen days’
notice of the damages portion of the hearing.
¶ 27 But even if we assume that notice of the hearing did not
strictly comply with section 15-10-401, we disagree that any defect
divested the court of jurisdiction. Mr. Black had actual notice of
the proceedings, and the possible consequences, more than
fourteen days before the evidentiary hearing. “[I]n the absence of
explicit statutory language requiring it, a statute requiring the
providing of notice by a specified means need not be strictly
applied.” Feldewerth v. Joint Sch. Dist. 28-J, 3 P.3d 467, 471 (Colo.
App. 1999). Nothing in section 15-10-401 indicates that the form of
notice is a jurisdictional requirement; thus, “actual notice may be
substituted for it.” Id.¶ 28 The GAL filed her motion to void the disclaimer on February 9,
2015, approximately four months before the first day of the
evidentiary hearing. The motion alleged that Mr. Black had
breached his fiduciary duties by converting more than $1 million of
Joanne’s assets for his own benefit. The GAL sought an order
voiding the disclaimer and the return of the converted assets to the
court registry.
11
¶ 29 The court held a status conference on April 2, 2015. In
response to a suggestion that the disclaimer could not be unwound,
the court reminded Mr. Black that “disgorgement” was a possible
remedy: “And does Mr. Black understand that under this process
he can be required to disgorge money?”
¶ 30 Following the status conference, the court issued a status
conference order, explaining that Mr. Black was “the subject of
allegations of misconduct” and suspending him as conservator
pending an evidentiary hearing to resolve the allegations. The
court’s order advised the parties that the evidentiary hearing would
address “whether the allegations of breach of fiduciary duty are
supported by the evidence and whether any disgorgement or
unwinding of fiduciary actions, including the creation of trusts, is
appropriate.”
¶ 31 We conclude that the notice of the allegations of breach of
fiduciary duty, and warnings that “disgorgement” was a possible
remedy, gave Mr. Black actual notice that he might be ordered to
reimburse Joanne for any funds improperly diverted out of the
conservatorship estate.
12
¶ 32 In any case, by the time of the hearing, the parties and the
court specifically used the term “surcharge” instead of
“disgorgement” to describe the possible remedy for a breach of
fiduciary duty. In her prehearing brief, Joanne’s counsel asked the
court to “surcharge the fiduciary” under section 15-10-504(2)(a).3
Mr. Black did not object to proceeding with the evidentiary hearing.
Then, on the second day of the hearing, the court noted that “this is
a surcharge action.” Again, Mr. Black did not object on the ground
that he was unaware of the nature of the proceedings. In fact, on
the third day of the hearing, Mr. Black’s counsel objected to certain
cross-examination as irrelevant because “it has nothing to do with
the issue[s],” one of which he defined as “whether or not a
surcharge ought to be imposed.” Later during the hearing, Mr.
Black’s counsel suggested to the court that a surcharge “would be
the only remedy available” for any breach of fiduciary duty.
¶ 33 Indeed, Mr. Black does not dispute that he had actual notice
of the surcharge proceedings. His argument is that any failure to
3 To the extent Mr. Black argues that no party sought surcharge
damages, Joanne’s prehearing brief refutes that claim. Moreover,
surcharge damages can by imposed on the court’s own motion.
§ 15-10-503(2)(g), C.R.S. 2017.
13
strictly comply with the statutory notice requirement constituted a
due process violation that deprived the court of jurisdiction to
impose sanctions. But we must reject that argument in light of Mr.
Black’s actual notice, coupled with his failure to object to a
purported lack of notice and his participation in the surcharge
proceedings. See Feldewerth, 3 P.3d at 471; see also City of
Philadelphia v. Urban Mkt. Dev., Inc., 48 A.3d 520, 522 (Pa. Commw.
Ct. 2012) (no due process claim based on lack of notice where party
had actual notice and participated in hearing).
III. Breach of Fiduciary Duty
¶ 34 We turn now to Mr. Black’s primary argument on appeal: that
he could not have breached his fiduciary duty to Joanne because
his conversion of one-third of her POD assets was disclosed to, and
approved by, the probate court, in accordance with section 15-14-
423.
¶ 35 We review de novo the legal questions concerning the fiduciary
duty’s nature and scope, but whether a fiduciary duty has been
breached is a factual question we review for clear error. Mintz v.
Accident & Injury Med. Specialists, PC, 284 P.3d 62, 68 (Colo. App.
14
2010), aff’d, 2012 CO 50. We review questions of statutory
interpretation de novo. Taylor v. Taylor, 2016 COA 100, ¶ 26.
A. A Fiduciary Has a Duty of Loyalty That Generally Precludes
Conflicted Transactions
¶ 36 A conservator is a fiduciary and must “observe the standards
of care applicable to a trustee.” § 15-14-418(1), C.R.S. 2017. Thus,
as Joanne’s conservator, Mr. Black owed her a “duty of undivided
loyalty.” Estate of Keenan v. Colo. State Bank & Tr., 252 P.3d 539,
543 (Colo. App. 2011) (citation omitted). Indeed, the “duty of loyalty
is, for trustees, particularly strict even by comparison to the
standards of other fiduciary relationships.” Restatement (Third) of
Trusts § 78 cmt. a (Am. Law Inst. 2007) (hereinafter Restatement).
¶ 37 Consistent with the duty of loyalty, a conservator must
manage the protected person’s assets for her sole benefit, without
regard to the interests of others. Jones v. Estate of Lambourn, 159
Colo. 246, 250, 411 P.2d 11, 13 (1966); see also § 15-1.1-105,
C.R.S. 2017 (“A trustee shall invest and manage the trust assets
solely in the interests of the beneficiaries.”); Hilliard v. McCrory, 110
Colo. 369, 371, 134 P.2d 1057, 1058 (1943) (“[I]t is the duty of a
15
conservator to conserve . . . the property and safeguard the interest
of its owner . . . .”).
¶ 38 To that end, the duty of loyalty strictly prohibits a conservator
from entering into transactions involving the protected person’s
property if the transaction is for the conservator’s personal benefit
or otherwise involves or creates a conflict between the fiduciary
duties and personal interests of the conservator. See Restatement §
78; see also In re Estate of Heyn, 47 P.3d 724, 726 (Colo. App.
2002) (trustee’s use of trust property creates presumption that
trustee has breached his fiduciary duties).
B. A Fiduciary May Engage in a Conflicted Transaction if He Gives
Notice of the Conflict and Shows That the Transaction is
Nonetheless Reasonable and Fair
¶ 39 Still, a conservator may obtain approval to engage in a
conflicted transaction if he (1) complies with section 15-14-423’s
notice requirement and (2) establishes that the conflicted
transaction is nonetheless reasonable and fair to the protected
person.
1. The Notice Requirement Under Section 15-14-423
¶ 40 Section 15-14-423 provides that “[a]ny transaction involving
the conservatorship estate that is affected by a substantial conflict
16
between the conservator’s fiduciary and personal interests is
voidable unless the transaction is expressly authorized by the court
after notice to interested persons.” The provision explains that a
“transaction affected by a substantial conflict between personal and
fiduciary interests includes any sale, encumbrance, or other
transaction involving the conservatorship estate entered into by the
conservator . . . .” Id.¶ 41 Mr. Black acknowledges that the act of disclaiming Joanne’s
assets created a conflict between his fiduciary duties to Joanne and
his own personal interests. But he insists that he did not breach
his fiduciary duties by engaging in the conflicted transaction
because he satisfied the notice requirement under section 15-14-
423 and the court expressly authorized the transaction.
a. The Statute Requires Objectively Reasonable Notice, Not Actual
Notice, of the Conflicted Transaction
¶ 42 As an initial matter, we agree with Mr. Black that whether he
complied with his notice obligations under the statute turns on the
nature of his disclosures and not the court’s subjective
understanding of those disclosures. In other words, to determine
Mr. Black’s compliance with the statute, we look at his actions and
17
evaluate whether his disclosures were sufficient to meet the
purpose of the statute. We do not attempt to divine the effect of the
disclosures on a particular judge to determine whether the court
received actual notice. See, e.g., Weaver v. Colo. Dep’t of Soc.
Servs., 791 P.2d 1230, 1233 (Colo. App. 1990) (Adequacy of notice
must be tested on an objective basis; “its validity . . . is dependent
upon its adequacy in providing the necessary information to a
reasonable person.”).
¶ 43 But we disagree with Mr. Black that the court improperly
applied an actual notice standard in finding that he failed to
adequately disclose all of the relevant information related to the
disclaimer transaction. The court reviewed all of the pleadings and
other documents, as well as Mr. Black’s statements, and
determined that the information provided was inadequate because
“at no time did [Mr. Black] explain his true intentions with regard to
the funds held in the [POD accounts].”
¶ 44 In our view, the court assessed compliance with the statutory
requirements based on an objective reasonableness standard. As
the court explained at the hearing, “none of th[e] documentary
evidence” amounted to a full disclosure: there was no “explicit
18
explanation of [the disclaimer] in any way, shape, or form.” The
notice of a conflicted transaction was not “in any of th[e] exhibits,”
or in the “transcript of the December hearing” to appoint the
conservator, or in any of the “written form of the orders” that the
court signed. The court looked at Mr. Black’s actions — not at its
subjective understanding of those actions — and found that he had
“failed to plainly and fully disclose his intentions and the intended
result of the disclaimer” and that, as an objective matter, his
disclosures were “woefully inadequate.”
¶ 45 To the extent the probate court also noted that it did not have
actual notice of the conflicted nature of the disclaimer transaction,
we discern no error.
¶ 46 At the evidentiary hearing, Mr. Black attempted to establish
that he had sufficiently disclosed the nature of the disclaimer
transaction by filing various documents that referenced Joanne’s
entitlement to two-thirds of mother’s residual estate. But his efforts
were undermined by his own conservatorship counsel’s repeated
concessions that these references did not provide unequivocal
notice of Mr. Black’s intent to divert one-third of the POD assets
into the Issue Trust. For example, counsel agreed that certain of
19
the documents were “ambigu[ous]” and that, in retrospect, he
understood that Mr. Black should have made an “actual” and
“express” disclosure “in a document filed with the court.” Even Mr.
Black’s litigation counsel acknowledged that Mr. Black’s disclosure
of the transaction did not qualify as “full” disclosure and conceded
that “if we could do it over — and by ‘we,’ I mean me,
[conservatorship counsel], and [Mr. Black] — we would do it
differently.”
¶ 47 So, Mr. Black presented an alternative argument: that,
notwithstanding any deficiencies in the disclosures, all of the
interested parties, at least, had actual notice of his interest in the
transaction. According to Mr. Black, he and his lawyer had
numerous, but undocumented, discussions with Joanne’s lawyer,
the GAL, and Joanne’s cousin, who was participating in the
proceedings as her advocate. Not only that, Mr. Black maintained,
but the parties had access to various documents, and approved a
proposed order submitted by Mr. Black, that put them on notice of
the consequences of the disclaimer. As Mr. Black’s litigation
counsel argued, “I think it’s pretty solid that [Joanne’s lawyer and
the GAL] had actual knowledge because we – the record is also very
20
clear that they had this will in their possession and they knew what
the will did.”
¶ 48 In its hearing order, the probate court not only rejected Mr.
Black’s argument that he had provided objectively reasonable notice
of the transaction, but also rejected his argument that the
disclosures, even if objectively deficient, had provided the court with
actual knowledge of the conflicted nature of the disclaimer.
Rejection of the latter argument necessarily required the court to
explain that it did not share Mr. Black’s subjective understanding of
the proffered documents. We perceive no error in the court’s
decision to address an argument expressly advanced by Mr. Black.
b. To Satisfy the Notice Requirement, the Fiduciary Must Disclose
the Conflict
¶ 49 Section 15-14-423, which is entitled “[s]ale, encumbrance, or
other transaction involving conflict of interest,” provides an
exception to the strict prohibition against a fiduciary’s participation
in transactions involving a conflict of interest. The purpose of the
notice requirement is to allow the court (and all interested parties)
to evaluate the nature of the conflict to determine whether, despite
the conflict, the transaction is permissible. At a minimum, then, the
21
fiduciary must disclose the conflict. A fiduciary may not seek safe
harbor under a provision that allows him to engage in a conflicted
transaction upon the approval of the court if he does not disclose to
the court that he is engaging in a conflicted transaction. This
seems so obvious to us as to be almost syllogistic.
¶ 50 And yet, by his own admission, at every stage of the
proceeding, Mr. Black failed to disclose his substantial conflict of
interest.
¶ 51 From its inception, the integrity of the conservatorship was
undermined by Mr. Black’s undisclosed conflict. Mr. Black
admitted that he sought the appointment as conservator for the
purpose of disclaiming Joanne’s interest in the POD assets so that
they could be redistributed in accordance with his and his
children’s expectations of his mother’s estate plan. He agreed that
the “interests of [his] children were in tension with the interest of
Joanne Black,” and that this “tension” amounted to a conflict of
interest. But he did not tell the probate court that he was laboring
under this conflict of interest when he filed his petition to be
appointed as Joanne’s conservator. “[A] person with a conflict of
interest cannot serve as conservator of the estate.” Fitzmaurice v.
22
Vandevort, ___ So. 3d ___, ___, 2017 WL 3426214, at *6 (Miss. Ct.
App. 2017) (citation omitted). If a conflict exists, “the fiduciary has
a duty to refuse the trust, resign, or remove the conflicting personal
interest.” Id. (citation omitted).
¶ 52 Nor did Mr. Black disclose the existence of a conflict of interest
at the time he requested authorization to disclaim Joanne’s assets,
even though he knew that “taking one-third of [Joanne’s] assets for
the benefit of [him] and [his] children was a conflict.” At the
evidentiary hearing, Mr. Black admitted that he never told the
probate court that “he faced a conflict” as conservator in seeking to
disclaim Joanne’s assets.
c. Even if Section 15-14-423 Requires Only Disclosure of the
Material Facts Concerning the Conflict, Mr. Black Failed to Satisfy
this Requirement
¶ 53 In the probate court, Mr. Black insisted that he “provided the
facts underlying the conflict,” and that the conflict was so “obvious”
that the underlying facts sufficed. On appeal, he reasserts the
argument that disclosure of certain facts satisfied his statutory
obligation to provide notice of the conflicted transaction.
¶ 54 We decline to deviate from our determination that the statute
requires disclosure of the nature of the conflict itself. But even if
23
disclosure of certain facts could substitute for disclosure of the
conflict, Mr. Black failed in this regard as well.
¶ 55 As a preliminary matter, we reject out of hand Mr. Black’s
argument that he had to disclose the facts only to “interested
parties” (the GAL, court-appointed counsel, and Joanne’s family
members), “not the court.” The statute requires that the proposed
conflicted transaction be “expressly authorized by the court.” Mr.
Black does not explain how the court could authorize the conflicted
transaction without notice of the conflict or even of the underlying
facts.
¶ 56 As for the adequacy of the disclosed information, the probate
court found that Mr. Black failed to disclose the intended effect of
the disclaimer — in other words, that the disclaimer involved a
conflict of interest. That finding is supported by the record.
¶ 57 In his petitions, Mr. Black assured the court that he intended
to “secure” the “$3 million in [POD] assets” until “such time as the
Court can determine the proper protection for the assets.” He did
not reveal his plan to disclaim the assets (or the anticipated loss to
Joanne of more than $1 million), though he acknowledged at the
24
evidentiary hearing that he sought the conservatorship for the very
purpose of disclaiming the assets.
¶ 58 At the December 11 hearing on the petition, when the
disclaimer was first raised, Mr. Black told the court that he was
going to “get [the] money from my mother into a trust; my cousin
will then be the trustee so she’ll have financial support.” He did not
mention that he intended to place only two-thirds of the assets into
a trust for Joanne and to distribute the remainder to himself and
his children.
¶ 59 In its order appointing Mr. Black as conservator, the court
directed that Joanne’s “assets will be placed into a Supplemental
Needs Trust” for her benefit. The order authorized Mr. Black to
disclaim the POD assets, but did not authorize any diversion of
those assets into a trust for the benefit of another person.
¶ 60 Indeed, as we have noted, even Mr. Black’s conservatorship
counsel conceded that, in hindsight, the disclosures were
ambiguous. And Mr. Black admitted that the information was
disclosed only “in effect” and “implicit[ly].”
¶ 61 Moreover, after Mr. Black was appointed conservator, he
further obfuscated the effect of the disclaimer by filing an original
25
inventory form that showed the value of the conservatorship assets
after Mr. Black had redirected one-third of the assets into the Issue
Trust, rather than their value as of the date of his appointment.
¶ 62 On appeal, however, Mr. Black says that the conflicted nature
of the disclaimer transaction was disclosed to the court in the
following documents: (1) a court visitor’s report and a doctor’s
letter, both submitted in October 2012; (2) two proposed orders
submitted in November 2012 and January 2013, respectively; and
(3) mother’s will and trust documents, submitted to the court and
parties in advance of the conservatorship hearing.
¶ 63 The probate court was not convinced that these documents
provided notice of the import of the disclaimer, and we cannot say
that the court is clearly wrong.
¶ 64 Both the court visitor report and the doctor’s letter recounted
statements from Mr. Black on the general distribution of mother’s
estate: two-thirds to Joanne and one-third to Mr. Black. Neither
document mentioned a planned disclaimer (Mr. Black would not
propose the disclaimer to the court for another six weeks) or that,
under the disclaimer transaction, some of Joanne’s POD assets
would be diverted to the Issue Trust.
26
¶ 65 The proposed orders did not provide any additional
information. In fact, the proposed orders did not mention a two-
thirds/one-third distribution at all. The proposed orders provided
only that, once the POD assets were disclaimed, they would revert
to the estate and two-thirds would be distributed to the SNT
pursuant to mother’s will. But the same proposed orders stated
that the POD assets would “flow into the Estate of [mother] and
then into the Supplemental Needs Trust for Respondent’s benefit”
and, even more unequivocally, that “Respondent’s assets will be
placed into a Supplemental Needs Trust for Respondent’s benefit.”
¶ 66 As for the will and trust documents, they would have provided
confirmation of the two-thirds/one-third split of assets from the
estate, but would not have explained that a portion of the
nonprobate POD assets were to be redirected to Mr. Black, despite
language in the petitions and proposed orders to the contrary.
¶ 67 Mr. Black contends that the court had a duty to synthesize all
of the disparate disclosures and infer from the information that Mr.
Black intended to redirect one-third of Joanne’s assets for his own
benefit. But as the Seventh Circuit has famously admonished,
“[j]udges are not like pigs, hunting for truffles buried in” the parties’
27
submissions. United States v. Dunkel, 927 F.2d 955, 956 (7th Cir.
1991). No document or statement submitted during the course of
the proceedings mentioned that Joanne’s disclaimed POD assets
would be redistributed, in part, to a trust of which Mr. Black and
his children were beneficiaries.
¶ 68 The fiduciary has “an affirmative duty to disclose material
information” about a conflicted transaction. Restatement § 78 cmt.
c(1). We conclude that the record fully supports the probate court’s
finding that Mr. Black failed to satisfy this duty.
2. The Requirement That a Conflicted Transaction be Reasonable
and Fair to the Protected Person
¶ 69 Disclosure of the conflicted transaction is not enough to
immunize a conservator from a breach of fiduciary duty claim. In
addition, the fiduciary has an obligation, independent of section 15-
14-423, to establish that the conflicted transaction is fair and
reasonable and not adverse to the interests of the protected person.
See In re Estate of Foiles, 2014 COA 104, ¶ 46; see also Day v.
Stascavage, 251 P.3d 1225, 1230 (Colo. App. 2010) (self-dealing
transaction must be undertaken in good faith, be fair to the party,
and be accompanied by full disclosure); Restatement § 78 cmt. c(1)
28
(“The court will permit a [conflicted] transaction . . . only if it
determines that it is in the interest of the beneficiaries to do so.”).
¶ 70 Mr. Black’s conservatorship lawyer acknowledged that the
disclaimer “harmed” Joanne because “instead of $3 million for her
lifetime, she now only has two,” and “$3 million . . . is clearly better
than $2 million.” To be sure, Mr. Black testified that he believed
the disclaimer benefitted Joanne. But the court was not obliged to
accept his self-serving testimony, particularly because Mr. Black
admitted that he did not consider any alternative to disclaiming and
then redistributing Joanne’s assets for his own benefit. He did not,
for example, seek any advice concerning options for protecting
Joanne’s interest in the POD assets. Nor did he consider, once the
assets were diverted into the Issue Trust, transferring Joanne’s
share of the assets back into the SNT.
¶ 71 In sum, Mr. Black failed to disclose the conflicted transaction
to the court and also failed to establish that the transaction, though
conflicted, was nonetheless reasonable and fair to Joanne.
Accordingly, the probate court did not err in finding that Mr. Black
breached his fiduciary duties. See Wright v. Wright, 182 Colo. 425,
428, 514 P.2d 73, 75 (1973) (trustee breached fiduciary duty by
29
using funds meant for the benefit of the beneficiaries for personal
use); In re Estate of McCart, 847 P.2d 184, 186 (Colo. App. 1992)
(trustee breached his fiduciary duties by acting with improper
motive and clear conflict of interest in seeking to conserve the trust
funds for himself and his heirs); see also Marshall v. Grauberger,
796 P.2d 34, 37 (Colo. App. 1990) (court may properly consider the
fiduciary’s motive in determining whether he breached his duties).
IV. Civil Theft
¶ 72 Next, Mr. Black contends that the probate court erred in
finding him liable for civil theft. He insists that the probate court
lacked jurisdiction over the claim; that the claim was time barred;
and that, in any event, the evidence was insufficient to establish the
elements of civil theft.
A. Jurisdiction
¶ 73 Mr. Black says that the probate court lacked jurisdiction to
resolve a civil theft claim and that a lack of notice also deprived the
court of jurisdiction.
1. Jurisdiction to Decide the Civil Theft Claim
¶ 74 “A court is said to have jurisdiction of the subject matter of an
action if the case is one of the type of cases that the court has been
30
empowered to entertain by the sovereign from which the court
derives its authority.” Paine, Webber, Jackson, & Curtis, Inc. v.
Adams, 718 P.2d 508, 513 (Colo. 1986) (citation omitted).
¶ 75 We review the issue of jurisdiction de novo. In re Estate of
Murphy, 195 P.3d 1147, 1150 (Colo. App. 2008). In determining
whether a particular court has jurisdiction, we consider the nature
of the party’s claim and the relief sought. Id.¶ 76 The Denver Probate Court has jurisdiction “in all matters of
probate . . . [and] appointment of guardians, conservators and
administrators, and settlement of their accounts . . . .” Colo. Const.
art. VI, § 9. More specifically, the probate court may “determine
every legal and equitable question arising in connection with
decedents’, wards’, and absentees’ estates, so far as the question
concerns any person who is before the court . . . by reason of any
asserted obligation to the estate.” § 13-9-103(3), C.R.S. 2017.
¶ 77 Under section 13-9-103(3), the phrase “in connection with”
has been construed broadly as a grant of authority to resolve
disputes “logically relating” to the estate. In re Estate of Owens,
2017 COA 53, ¶ 13 (quoting Estate of Murphy, 195 P.3d at 1151).
31
¶ 78 The civil theft claim is coterminous with the breach of
fiduciary duty claim, and is thus directly related to Mr. Black’s
“obligation[s] to [Joanne’s] estate.” § 13-9-103(3). As a conservator,
Mr. Black had an obligation to preserve Joanne’s assets, and any
claim that he failed to do so arises “in connection with” her estate
and concerns someone “who is before the court . . . by reason of
an[] asserted obligation to [that] estate.” Id.; Estate of Murphy, 195
P.3d at 1151. Accordingly, we conclude that the probate court had
jurisdiction to consider the civil theft claim.
¶ 79 We are not persuaded otherwise by Mr. Black’s argument that
jurisdiction is lacking because the civil theft statute is found in the
criminal code. The civil theft statute does not set forth a criminal
violation; it establishes a private civil remedy for theft. See Itin v.
Ungar, 17 P.3d 129, 133 (Colo. 2000). Thus, pursuant to section
13-9-103, a civil theft claim is cognizable by the probate court when
the claim is logically related to the estate.
¶ 80 In his reply brief, Mr. Black also argues that the probate court
lacks jurisdiction to order punitive relief while sitting in equity.
Because this contention was raised for the first time in the reply, we
32
decline to address it. DeHerrera v. Am. Family Mut. Ins. Co., 219
P.3d 346, 352 (Colo. App. 2009).
2. Notice of the Claim
¶ 81 Mr. Black also says that the court lacked jurisdiction to
resolve the civil theft claim because he had no “advance notice” of
the claim, as it was not raised in a complaint but instead was
asserted in a motion.
¶ 82 First, Mr. Black did have notice of the civil theft claim. The
motion was filed on June 15, the day before the evidentiary hearing
began, but the court conducted a bifurcated proceeding and it
informed the parties in advance (by order dated August 6) that it
would not consider the civil theft claim until September 8.
¶ 83 Second, though not styled as a complaint, the motion set forth
the allegations against Mr. Black and explained how the allegations
satisfied the elements of a civil theft claim.
¶ 84 Third, whatever defects Mr. Black perceives in the timing or
form of the allegations, he waived any claim on appeal by failing to
object in the probate court. “Despite any defect in the pleadings, an
issue is deemed properly before the court where it has been tried
before the court without timely objection or motion.” CB Richard
33
Ellis, Inc. v. CLGP, LLC, 251 P.3d 523, 528-29 (Colo. App. 2010); see
also C.R.C.P. 15(b) (“When issues not raised by the pleadings are
tried by express or implied consent of the parties, they shall be
treated in all respects as if they had been raised in the pleadings.”).
¶ 85 At no time — not after the motion was filed nor after the court
issued the August 6 minute order — did Mr. Black complain that he
had insufficient notice of the request for civil theft damages or that
the form of the allegations was somehow deficient. To the contrary,
Mr. Black filed a motion to dismiss the civil theft claim under
C.R.C.P. 12(c), and challenged the claim as time barred and the
allegations as insufficient to establish a statutory violation, but he
said nothing about the adequacy of the notice or the form of the
allegations.
¶ 86 He now maintains that he had “no opportunity” to conduct
discovery on the claim or to demand a jury, but he did not ask to
conduct discovery, nor did he request a jury. Instead, he proceeded
to participate in the evidentiary hearing. Therefore, the civil theft
issue was properly before the probate court. See Great Am. Ins. Co.
v. Ferndale Dev. Co., 185 Colo. 252, 255, 523 P.2d 979, 980 (1974)
(although answer was never formally amended to include
34
affirmative defense, issue was properly before the court where
opposing counsel never objected to the issue being tried).
B. Timeliness of the Civil Theft Claim
¶ 87 In the alternative, Mr. Black contends that the civil theft claim
is time barred. A claim for civil theft must be brought within two
years after “the date both the injury and its cause are known or
should have been known by the exercise of reasonable diligence.”
§§ 13-80-102(1)(a), 13-80-108(1), C.R.S. 2017. The date a claim
accrues is a question of fact that we review for clear error. Williams
v. Crop Prod. Servs., Inc., 2015 COA 64, ¶ 4.
¶ 88 Mr. Black says that the claim accrued in March 2013, when
the court issued its order authorizing the disclaimer. At that point,
his argument goes, he had sufficiently disclosed the nature of the
disclaimer transaction, and the court and all interested parties were
on notice of his intent to convert Joanne’s assets for his own
benefit. But we have already rejected that argument for purposes of
the breach of fiduciary duty analysis, and so we reject it for present
purposes as well.
35
¶ 89 Instead, we affirm the probate court’s finding, which is amply
supported by the record, that the claim accrued in September 2014,
when Mr. Black filed an amended annual report.
¶ 90 Mr. Black’s original inventory did not accurately represent
Joanne’s assets on the date of his appointment or reveal the
transfer of assets to Mr. Black. Instead, the inventory simply listed
Joanne’s assets (minus the Roth IRA, which was omitted entirely)
as of the end of March 2013, after Mr. Black had diverted $1 million
into the Issue Trust. Thus, as Mr. Black’s conservatorship counsel
recognized, the inventory might have given the false impression that
all of Joanne’s POD assets were disclosed, but that the assets had
lost value over time. It was not until September 2014, when Mr.
Black filed an amended accounting that showed some irregularities
in his management of the conservatorship estate, that the parties
had any reason to suspect misconduct. Therefore, the probate
court did not err in determining that the civil theft claim accrued in
September 2014 and was timely asserted in June 2015.
36
C. Sufficiency of the Evidence of Theft
¶ 91 On the merits, Mr. Black contends that there was insufficient
evidence in the record to support the court’s finding that he
committed civil theft.
¶ 92 When sufficiency of the evidence is challenged on appeal, we
must determine whether the evidence, viewed as a whole and in the
light most favorable to the prevailing party, is sufficient to support
the ruling. Parr v. Triple L & J Corp., 107 P.3d 1104, 1106 (Colo.
App. 2004). Where, as here, the party challenges the court’s factual
findings, we review those findings for clear error. Fid. Nat’l Title Co.
v. First Am. Title Ins. Co., 2013 COA 80, ¶ 13. Because the
credibility of the witnesses and the sufficiency, probative effect, and
weight of all the evidence, as well as the inferences and conclusions
to be drawn therefrom, are all within the province of the trial court,
we will not disturb the court’s findings of fact unless they are so
clearly erroneous as to find no support in the record. Id.¶ 93 To recover civil theft damages, a party must prove, by a
preponderance of the evidence, that the defendant committed all of
the elements of criminal theft. Itin, 17 P.3d at 134. A person
commits theft when he “knowingly obtains, retains, or exercises
37
control over anything of value of another without authorization or
by threat or deception” with the intent to deprive the other person
permanently of the thing of value. § 18-4-401(1), C.R.S. 2017.
“[T]heft by deception requires proof that misrepresentations caused
the victim to part with something of value and that the victim relied
upon the swindler’s misrepresentations.” People v. Roberts, 179
P.3d 129, 132 (Colo. App. 2007) (quoting People v. Warner, 801 P.2d
1187, 1189-90 (Colo. 1990)), aff’d, 203 P.3d 513 (Colo. 2009),
superseded by statute on other grounds, Ch. 244, sec. 2, § 18-4-
401(4), 2009 Colo. Sess. Laws 1099-1100.
¶ 94 Mr. Black does not dispute that there was sufficient evidence
that he obtained control over Joanne’s assets with the intent to
permanently deprive her of them. He disputes only the probate
court’s finding of deception.
¶ 95 A finding of deception requires proof that the defendant made
misrepresentations to the victim.4 In this context, a
4 In this case, the misrepresentations made to the probate court are
sufficient. See People v. Devine, 74 P.3d 440, 444 (Colo. App. 2003)
(deception made upon the probate court in an effort to commit theft
from a victim’s estate satisfies the requirements of section 18-4-
401(1), C.R.S. 2017). To the extent this creates any appearance of
38
“misrepresentation is a false representation of a past or present fact
or a promise to perform a future act made with the present
intention not to perform the promise or future act.” People v. Lewis,
710 P.2d 1110, 1116-17 (Colo. App. 1985). This includes
statements that are misleading or “convey a false understanding . . .
by concealment of information.” People v. Harte, 131 P.3d 1180,
1185 (Colo. App. 2005); see also People v. Campbell, 58 P.3d 1148,
1161 (Colo. App. 2002) (failure to disclose material information
could support element of theft by deception).
¶ 96 The record supports the probate court’s finding that Mr. Black
made misrepresentations or misleading statements or that he
concealed material facts:
• In his petitions to the probate court, Mr. Black averred that
Joanne was “entitled to approximately $3 million,” and he
pledged to place the POD assets in trust for her benefit. In
reality, though, Mr. Black sought appointment as
impropriety with the probate court acting as the fact finder, Mr.
Black did not raise this issue in the probate court or on appeal.
Because he could have moved to disqualify the judge, but did not,
he cannot now complain about any appearance of impropriety
caused by the judge adjudicating the civil theft claim. See Bishop &
Co. v. Cuomo, 799 P.2d 444, 447 (Colo. App. 1990).
39
conservator precisely because he believed that Joanne was
not entitled to $3 million, but only to a two-thirds share of
those assets, and he intended from the start to divert one-
third for his own benefit, despite his duty of loyalty to
Joanne.
• Mr. Black appropriated the entire value of the Roth IRA.
Just after he exercised the disclaimer, he moved those funds
into multiple accounts in the names of his children. He did
not disclose the conversion of the Roth IRA funds to anyone,
including his lawyer. At the hearing, he testified that he was
advised to divest Joanne of the Roth IRA funds “for tax
reasons,” but he could not identify the source of that advice.
• Mr. Black testified that he offset the value of the Roth IRA
funds against his share of estate funds, but the independent
accounting expert’s report contradicted that testimony.
• Mr. Black was required to submit an original inventory of
Joanne’s assets as of the date of his appointment in
December 2012. He determined, apparently with input from
his lawyer, that it would be more “sensible” to file an original
inventory that showed Joanne’s assets as of March 31,
40
2013, after he had exercised the disclaimer. Thus, the
inventory did not disclose that $1 million of the POD assets
had been redirected into the Issue Trust. Mr. Black’s lawyer
acknowledged that the inventory might have conveyed the
false impression that all of the POD assets had been
distributed to the SNT but had depreciated in value between
December 2012 and March 2013.
• Mr. Black did not disclose the Roth IRA funds on the
inventory.
• At trial, Mr. Black testified that “all the money is accounted
for. There have been no improprieties, no misdeeds, no
misspending of money.” He insisted that the allegations
were a “complete concoction.” In fact, Mr. Black’s own
accounting expert concluded that Mr. Black had failed to
distribute even two-thirds of the assets to Joanne, leaving a
“shortfall” owed by Mr. Black. According to the independent
accounting expert, the estate no longer had sufficient assets
to cover the shortfall. (Mr. Black admitted to paying his
personal income taxes, his children’s private school tuition,
and his older children’s student loan bills from the estate.)
41
¶ 97 Mr. Black also contends that there was insufficient evidence of
reliance and that the court failed to make findings of fact on this
element. When a conservator allegedly commits theft from a
protected person by deception on the probate court, reliance is
established if the probate court relied on the misrepresentations in
authorizing the theft. People v. Devine, 74 P.3d 440, 444 (Colo.
App. 2003).
¶ 98 Here, the court made clear that it relied on Mr. Black’s
misrepresentations in authorizing the disclaimer, and that it would
not have authorized the transaction had it known the true facts.
Any documentary evidence contradicting Mr. Black’s
misrepresentations does not negate the court’s reliance. See People
v. Carlson, 72 P.3d 411, 416 (Colo. App. 2003) (victim’s testimony
that he relied on defendant’s misrepresentation was sufficient to
prove reliance, despite the fact that victim reviewed documents that
purported to conflict with the misrepresentation).
¶ 99 We are not persuaded by Mr. Black’s contention that his
purported reliance on counsel negates any finding of deception.
¶ 100 For one thing, his lawyer testified that Mr. Black did not
disclose his conversion of the Roth IRA funds. Thus, contrary to
42
Mr. Black’s assertion, he did not “provid[e] full information to
counsel.”
¶ 101 Moreover, the court was not required to credit Mr. Black’s
testimony that he acted strictly in accordance with the advice of
counsel. Mr. Black acknowledged that he, not his lawyer, devised
the plan to seek appointment as Joanne’s conservator for the
purpose of redistributing the POD assets. The probate court did
not have to accept Mr. Black’s assurances that once he became
conservator, his conduct was dictated entirely by his lawyer. The
probate court’s rejection of Mr. Black’s testimony turns on
credibility determinations that are binding on us, and we may not
substitute our judgment for that of the probate court. People v. Poe,
2012 COA 166, ¶ 14.
¶ 102 Accordingly, we conclude the evidence was sufficient to
sustain a finding that Mr. Black committed civil theft.
V. The Fairness of the Hearing
¶ 103 Mr. Black contends that the probate court committed a series
of errors that rendered the evidentiary hearing so unfair that
reversal is required.
A. Denial of Continuances
43
¶ 104 Mr. Black insists that the court abused its discretion when it
denied two requests for continuances of the evidentiary hearing.
¶ 105 In his first request for a continuance, Mr. Black’s litigation
counsel argued that he needed additional time to conduct
discovery, including “likely” taking depositions. The court denied
the request, noting that the New York proceedings had created
some urgency to resolve the breach of fiduciary duty allegations.
But, to accommodate Mr. Black’s potential deposition schedule, it
substantially shortened the interested parties’ time to respond to
written discovery.
¶ 106 In his second request for a continuance, submitted a week
before the surcharge and civil theft hearing in September 2015, Mr.
Black’s litigation counsel told the court that his mother had
recently died and that he had suffered a knee injury, circumstances
that affected his ability to prepare for the hearing. The court
expressed sympathy but denied the request, citing the ongoing
proceedings in New York and the difficulty in scheduling the
September hearing.
¶ 107 The decision to grant or deny a continuance lies within the
sound discretion of the trial court and will not be set aside on
44
appeal absent a clear abuse of discretion. Butler v. Farner, 704
P.2d 853, 858 (Colo. 1985). In determining whether to grant a
continuance, the court should consider the circumstances of the
particular case, weighing the right of the party requesting the
continuance to a fair hearing against the prejudice that may result
from delay. Id. Even if the court abuses its discretion, however,
reversal is not warranted unless a party demonstrates actual
prejudice. People v. Chambers, 900 P.2d 1249, 1253 (Colo. App.
1994).
¶ 108 We discern no abuse of discretion in the court’s denial of the
requests for continuances, but even if we did, Mr. Black has failed
to allege, much less demonstrate, any prejudice, except in the most
cursory terms.
¶ 109 He says the denial of the first request was prejudicial because
it prevented him from deposing the cousin. But he does not explain
why he could not have deposed the cousin in the time allotted. Nor
does he explain how the failure to depose the cousin rendered his
cross-examination less effective. Moreover, counsel did not object
to the cousin’s testimony on the ground that he had not had an
opportunity to depose the witness. Thus, the court’s denial of the
45
first request does not constitute reversible error. See, e.g., id. (no
showing of prejudice resulting from denial of continuance on
grounds of late endorsement of witness where the defendant cross-
examined the witness and did not articulate how further
investigation would have helped); People v. Kraemer, 795 P.2d 1371,
1376 (Colo. App. 1990) (no showing of prejudice from late
endorsement of witness where defendant failed to establish that his
preparation or performance would have been different had he
known the content of the witness’s testimony earlier).
¶ 110 As for the denial of the second request, Mr. Black says only
that he was “deprived of [his] senior, experienced counsel.” In fact,
Mr. Black’s litigation counsel attended the hearing, along with co-
counsel who had participated in the prior proceedings. Mr. Black’s
litigation counsel told the court that he had assisted co-counsel in
preparing for the hearing. Thus, in the absence of some
particularized showing of prejudice, we discern no reversible error
from the court’s denial of the second request for a continuance. See
Farner, 704 P.2d at 859 (no prejudice from denial of request for
continuance due to unavailability of principal counsel when
alternative counsel was available).
46
B. Expert Witness
¶ 111 We also reject Mr. Black’s contention that the court erred in
excluding his proffered expert witness. We review a trial court’s
decision to exclude expert testimony for an abuse of discretion and
will not overturn the court’s ruling unless it is “manifestly
erroneous.” People v. Williams, 790 P.2d 796, 797-98 (Colo. 1990).
¶ 112 Pursuant to CRE 702, expert testimony is admissible if it will
“assist the trier of fact to understand the evidence or to determine a
fact in issue.” “When the trial court is sitting as the fact finder, it
need not admit expert testimony on an issue that it is capable of
resolving itself.” Sniezek v. Colo. Dep’t of Revenue, 113 P.3d 1280,
1284 (Colo. App. 2005). The probate court determined that the
expert testimony would not have been helpful, and we will not
second-guess the court’s determination.
¶ 113 Counsel explained that the expert would opine that Mr.
Black’s disclosures were sufficient to put the interested parties on
notice of the effect of the disclaimer — in other words, according to
counsel, the expert would “tell [the court] the law.” To the extent
the expert intended to testify about the correct legal standard, his
testimony was inadmissible. See, e.g., People v. Pahl, 169 P.3d 169,
47
182 (Colo. App. 2006) (“[A]n expert may not usurp the function of
the court by expressing an opinion on the applicable law or legal
standards.”).
¶ 114 To the extent the expert intended to opine that the visitor’s
report, the doctor’s letter, the proposed orders, and the will and
trust documents disclosed the conflicted nature of the disclaimer
transaction, the court could properly have concluded that it was in
a better position than the expert to make that determination. As
the court noted, resolution of the case depended on “the facts and
the actions of what the people said and what they did and what
they testified that they intended.” The court acted well within its
discretion in determining that the expert’s testimony would not be
helpful. See Sniezek, 113 P.3d at 1284; see also Huntoon v. TCI
Cablevision of Colo., Inc., 969 P.2d 681, 689 (Colo. 1998) (in
considering admissibility of expert testimony, court must first
determine whether the proffered expert testimony will be helpful to
the trier of fact).
C. The Court’s Comments During the Hearing
¶ 115 Mr. Black also contends that the court “improperly testified
about key facts and witness credibility.” He points to two instances
48
of supposed improper conduct by the court: First, he recounts an
exchange between litigation counsel and the court in which the
court explained that, based on its own memory of the
circumstances surrounding Mr. Black’s disclosures, it “absolutely
did not have any understanding that a third of these assets was
going to go to somebody else.” Second, he notes that, at one point
in the hearing, the court stated that, based on its observations of
Joanne’s court-appointed counsel and the GAL, it was “satisfied”
that neither of those interested parties had actual knowledge of Mr.
Black’s plan to convert his sister’s assets for his benefit.
¶ 116 In addressing the first instance of alleged misconduct, we
think some context is helpful. On the third day of the evidentiary
hearing, Mr. Black’s litigation counsel raised a question about the
scope of the hearing. But that discussion quickly morphed into an
argument by counsel on the merits of Mr. Black’s position.
Throughout counsel’s extended argument, the court asked
questions and made comments. Several minutes into the
argument, after counsel had described all of the evidence
purportedly proving that the GAL and Joanne’s court-appointed
49
counsel had actual knowledge that the disclaimer would divest
Joanne of one-third of her money, the following exchange occurred:
THE COURT: Well, [court-appointed counsel
and the GAL] have already testified that that’s
not their understanding of the way this was
going to work.
MR. BLACK’S COUNSEL: Well, I – I agree that
that’s what they testified to . . . .
We’re now talking two and a half years later
when apparently – I don’t know why they’re
testifying the way they are, but I think it’s
pretty solid that they had actual knowledge
because we – the record is also very clear that
they had this will in their possession and they
knew what the will did.
THE COURT: I mean, you know, part of the
problem okay is I have my own independent
memory of all this.
MR. BLACK’S COUNSEL: And I guess – I’m
dying to ask you, what is it?
THE COURT: And I have to tell you it’s really
in accord with what everyone else is saying. I
absolutely did not have any understanding
that a third of these assets were going to go to
somebody else.
MR. BLACK’S COUNSEL: Uh-huh.
THE COURT: It was my understanding that
the disclaimer would go, the money would go
into the estate and then all go back out into
her trust.
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MR. BLACK’S COUNSEL: And then 100
percent would go to –
THE COURT: Right.
MR. BLACK’S COUNSEL: And I appreciate
your candidly sharing that with me, Your
Honor.
¶ 117 As an initial matter, we are hard pressed to characterize the
court’s comments as error when they were essentially invited by Mr.
Black’s counsel. Cf. Hansen v. State Farm Mut. Auto. Ins. Co., 957
P.2d 1380, 1385 (Colo. 1998) (Under the invited error doctrine, “a
party may not later complain where he or she has been the
instrument for injecting error in the case.”).
¶ 118 And, contrary to his assertion on appeal, Mr. Black never
objected to any of the court’s comments during counsel’s extended
argument.5 He complains that the court’s spontaneous “testimony”
5 Mr. Black says that his counsel told the court that he was
“disturbed” by the court’s comments; in fact, what he told the court
was, “what I’m disturbed about is their [court-appointed counsel
and the GAL] refusal to concede at any point that they might have
known [about the effect of the disclaimer]” because “I just cannot
accept that they didn’t know that’s what was going to happen.” And
he “cho[se] his words carefully” not because he was about to object
to the court’s comments and he thought the objection might offend
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deprived him of a right to cross-examine a witness, but he never
sought a remedy. Mr. Black could have moved to disqualify the
judge or requested that she recuse herself, which would have
allowed him the opportunity to call her as a witness. Because Mr.
Black never sought to disqualify the judge, he waived any claim that
he was denied his right to cross-examine her. See Estate of Binford
v. Gibson, 839 P.2d 508, 511 (Colo. App. 1992) (declining to
consider untimely motion to recuse), abrogated on other grounds by
Scott v. Scott, 136 P.3d 892 (Colo. 2006); Bishop & Co. v. Cuomo,
799 P.2d 444, 447 (Colo. App. 1990).
¶ 119 But perhaps more to the point, we reiterate that, in the
probate court, Mr. Black argued vigorously that all of the interested
parties had actual knowledge of, and had signed off on, Mr. Black’s
plan to take money from his sister. For example, during his
extended argument, Mr. Black’s counsel directed the court to a
proposed order submitted by Mr. Black. When the court pointed
out that it had not signed the order, counsel explained that he was
offering the proposed order to show that “[court-appointed counsel]
the court, but because he was about to accuse Joanne’s lawyer of
knowingly allowing Mr. Black to convert Joanne’s assets.
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and [the GAL] had actual knowledge of what the disclaimer was
going to do.” He also told the court about telephone conversations
between Mr. Black’s conservatorship counsel and the other
interested parties, during which all parties supposedly reached “an
agreement” that Mr. Black would take one-third of the assets by
way of the disclaimer.
¶ 120 Thus, as we have explained, the court’s comments at the
hearing and in its written hearing order were a direct response to
Mr. Black’s actual notice argument. The court was not testifying as
a witness; it was properly commenting on counsel’s position that
the court, as well as the interested parties, had understood
(notwithstanding the less-than-full disclosure) that Mr. Black
intended to reroute a portion of Joanne’s assets into the Issue
Trust. Under these circumstances, we cannot say that the court’s
comments were improper.
¶ 121 We now address the second instance of alleged misconduct, in
which, according to Mr. Black, the court improperly commented on
the credibility of two witnesses. In response to counsel’s allegation
that Joanne’s lawyer and the GAL had both agreed to Mr. Black’s
plan, the court stated, “[court-appointed counsel] and [the GAL]
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don’t get exercised about much and they’re pretty exercised about
this. So I’m satisfied that they really didn’t know [about the effect
of the disclaimer] and neither did I.”
¶ 122 We note, as a preliminary matter, that the court may consider
demeanor in assessing credibility. People v. Constant, 645 P.2d
843, 846 (Colo. 1982). But again, as Mr. Black acknowledges in his
briefing, the court’s comment went to whether the interested parties
had actual knowledge of the conflicted nature of the disclaimer
transaction, an argument raised by Mr. Black.
¶ 123 In sum, these two comments by the court did not render the
four-day evidentiary hearing so unfair as to require reversal.
VI. The 2013 Trust
¶ 124 Finally, Mr. Black contends that the probate court erred in
concluding that he was not authorized to create a separate trust
(the 2013 Trust), into which he deposited Joanne’s workers’
compensation benefits and her Social Security disability insurance
benefits. We discern no error.
¶ 125 Pursuant to section 15-14-411(1)(d), C.R.S. 2017, a
conservator must obtain “express authorization” from the court
before creating a trust of property of the estate. In considering
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whether to approve this request, the court must consider whether
the trust is in the best interest of the protected person, along with
numerous other factors. § 15-14-411(3).
¶ 126 Mr. Black insists that “express authorization” was obtained in
the conservatorship order because he requested, and was granted,
authority to “place [workers’ compensation] benefits in trust for
Respondent (Joanne Black Trust II).” However, no information
(including documents related to the 2013 Trust) was submitted to
the court that would have allowed it to make the necessary
determination, required under section 15-14-411(3), of whether the
2013 Trust was in Joanne’s best interest. And without this prior
determination, the court could not have expressly authorized the
2013 Trust. Accordingly, we conclude that the probate court did
not err in determining that the 2013 Trust was not expressly
authorized.
VII. Cross Appeal
¶ 127 Joanne cross-appeals, contending that the probate court erred
by failing to make explicit findings denying her request to void the
disclaimer. We discern no error.
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¶ 128 Under section 15-10-503, when a fiduciary has breached his
duties, the probate court has significant discretion to impose a
variety of remedies to protect the protected person or the assets of
the estate. The statute empowers the probate court to order “[s]uch
further relief as the court deems appropriate.” § 15-10-503(2)(i).
¶ 129 The determination of the proper remedy is within the sound
discretion of the trial court. We discern no abuse of discretion in
the court’s decision to impose a surcharge rather than to order that
the disclaimer transaction be unwound. See Virdanco, Inc. v. MTS
Int’l, 820 P.2d 352, 354 (Colo. App. 1991) (in breach of fiduciary
duty action, court did not err in electing a different remedy than
one initially requested by the plaintiff).
VIII. Appellate Attorney Fees
¶ 130 Joanne seeks appellate attorney fees pursuant to section 18-4-
405, C.R.S. 2017, which requires an award of fees upon a finding of
civil theft. We agree that she is entitled to fees under this provision.
Pursuant to C.A.R. 39.1, we exercise our discretion and remand to
the probate court for a determination of reasonable appellate
attorney fees.
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IX. Conclusion
¶ 131 The order is affirmed, and the case is remanded to the probate
court for a determination of reasonable appellate attorney fees.
JUDGE FURMAN and JUDGE BERGER concur.
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