ATTORNEYS WHO HAD ACCEPTED A RETAINER TO CONTEST THE REMOVAL OF A GUARDIAN WERE NOT REQUIRED TO RETURN THE RETAINER BECAUSE IT WAS PAID FROM THE INCAPACITATED PERSON’S FUNDS, NO PROOF THE ATTORNEYS WERE AWARE OF THE SOURCE OF THE FUNDS, SUPREME COURT REVERSED (SECOND DEPT).

The Second Department, reversing Supreme Court, over a two-justice dissent, determined that the attorneys (the appellants), who had accepted a retainer to contest the removal of a guardian (the daughter) for an incapacitated person (Domenica P.), were not required to return the retainer which had been paid from the incapacitated person’s funds. The Second Department determined there was no evidence the attorneys were aware of the source of the funds:

This particular proceeding is substantially different from a Mental Hygiene Law § 81.43 proceeding brought directly against the incapacitated person’s attorney-in-fact … , or directly against someone having a different type of fiduciary and confidential relationship with the incapacitated person … . This turnover proceeding was brought against the law firm retained by the daughter to challenge the Supreme Court’s decision to remove her as guardian of the person of her incapacitated mother, with whom she had been living for some time. In the absence of any indicia that the appellants colluded with the daughter in converting her mother’s funds, or had substantial knowledge that the money used for the retainer was derived from funds belonging to Domenica P., no judgment against them is warranted.

Contrary to the Supreme Court’s determination, the inquiry by the appellants was sufficient. The appellants accepted a check from the daughter’s individual checking account. After the appellants asked the daughter if this was her own money or if it belonged to Domenica P., she told them that the $20,000 came from her own savings. Under these circumstances, the appellants had no reasonable obligation to further investigate, or assess the truthfulness of, their prospective client. What is most revealing is that the appellant law firm rightfully rejected a subsequent check from the daughter drawn on an account held jointly in names of the daughter and Domenica P. Matter of Domenica P., 2018 NY Slip Op 02151, Second Dept 3-28-18

MENTAL HYGIENE LAW (GUARDIANSHIP, ATTORNEYS, ATTORNEYS WHO HAD ACCEPTED A RETAINER TO CONTEST THE REMOVAL OF A GUARDIAN WERE NOT REQUIRED TO RETURN THE RETAINER BECAUSE IT WAS PAID FROM THE INCAPACITATED PERSON’S FUNDS, NO PROOF THE ATTORNEYS WERE AWARE OF THE SOURCE OF THE FUNDS, SUPREME COURT REVERSED (SECOND DEPT))/GUARDIANSHIP (MENTAL HYGIENE LAW, ATTORNEYS WHO HAD ACCEPTED A RETAINER TO CONTEST THE REMOVAL OF A GUARDIAN WERE NOT REQUIRED TO RETURN THE RETAINER BECAUSE IT WAS PAID FROM THE INCAPACITATED PERSON’S FUNDS, NO PROOF THE ATTORNEYS WERE AWARE OF THE SOURCE OF THE FUNDS, SUPREME COURT REVERSED (SECOND DEPT))/ATTORNEYS (MENTAL HYGIENE LAW, RETAINER, ATTORNEYS WHO HAD ACCEPTED A RETAINER TO CONTEST THE REMOVAL OF A GUARDIAN WERE NOT REQUIRED TO RETURN THE RETAINER BECAUSE IT WAS PAID FROM THE INCAPACITATED PERSON’S FUNDS, NO PROOF THE ATTORNEYS WERE AWARE OF THE SOURCE OF THE FUNDS, SUPREME COURT REVERSED (SECOND DEPT))