North Bend Senior Citizens Home v. Cook

• Decision Date: 30 March 2001
• Docket Number: No. S-99-1375.,S-99-1375.
• Citation: 623 N.W.2d 681,261 Neb. 500
• Parties: NORTH BEND SENIOR CITIZENS HOME, INC., Assignee, Appellant, v. Cheryll COOK, also known as Cheryll Weber, Appellee.
• Court: Nebraska Supreme Court

623 N.W.2d 681

261 Neb. 500

NORTH BEND SENIOR CITIZENS HOME, INC., Assignee, Appellant, v. Cheryll COOK, also known as Cheryll Weber, Appellee.

No. S-99-1375.

Supreme Court of Nebraska.

March 30, 2001.

James L. Haszard and Stephanie R. Hupp, of McHenry, Haszard, Hansen & Roth, Lincoln, for appellant.

L.J. Karel, of Karel & Seckman, Schuyler, for appellee.

HENDRY, C.J., WRIGHT, CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.

HENDRY, Chief Justice.

INTRODUCTION

North Bend Senior Citizens Home, doing business as Birchwood Manor (Manor), as assignee, brought an action against Cheryll Weber, also known as Cheryll Cook (Cook), to recover over $83,000 Cook allegedly converted while acting as power of attorney for Laura Duda, a resident of the Manor. Duda assigned her claim against Cook to the Manor.

The district court granted summary judgment in favor of Cook, determining that the assignment from Duda to the Manor was void as against public policy. The Manor appeals, claiming the district court erred in determining that the assignment was void. We moved this case to our docket pursuant to our power to regulate the Nebraska Court of Appeals' caseload and that of this court. See Neb.Rev.Stat. § 24-1106(3) (Reissue 1995).

FACTUAL BACKGROUND

On December 7, 1990, Duda, age 90, executed a power of attorney in favor of her grandniece, Cook. In 1991, Duda became a resident of the Manor. Beginning in 1991 and during 1992, Cook wrote checks on Duda's bank accounts totaling $83,255.04, expending the money for Cook's personal use.

Despite Cook's frequent use of Duda's bank accounts for Cook's own personal benefit, Cook failed to pay Duda's nursing home bills. Duda's account with the Manor first became delinquent in August 1992. Donald Hruza, administrator of the Manor, contacted Cook on several occasions regarding the delinquent account. The Manor last received payment from Cook on Duda's account in May 1993. By February 24, 1994, Duda's unpaid account at the Manor amounted to $19,420.62. In April 1994, Cook applied for public assistance on Duda's behalf, and the Manor began receiving medicaid funds for Duda's care.

Shortly after Cook applied for public assistance for Duda in 1994, the Manor became suspicious of Cook's actions regarding Duda's funds due to statements Cook made to a social worker while applying for public assistance on Duda's behalf. The Manor began investigating banking transactions involving Duda's accounts and discovered that Cook had been utilizing funds from Duda's bank accounts for Cook's own personal use.

On January 30, 1998, Hruza and Rodney Johnson, the Manor's attorney, presented to Duda a document entitled "Assignment," which assigned to the Manor Duda's "entire interest ... in any debt due to her from Cheryll Cook and in any claim she may have for recovery of funds taken from her by Cheryll Cook." Duda signed the document.

On March 30, 1998, the Manor, as assignee, filed an action against Cook, seeking to recover the $83,255.04 of Duda's funds that Cook had used for her own personal use. By June 1999, Duda's unpaid nursing home bill amounted to $23,344.69.

On September 29, 1999, the Manor filed a motion for partial summary judgment. In its motion, the Manor sought judgment as a matter of law, asserting that Cook, acting as Duda's attorney in fact, used Duda's funds for her own personal benefit and that those funds had not been repaid by Cook. On September 30, Cook filed a motion for summary judgment.

At the October 13, 1999, hearing on these motions several exhibits were admitted into evidence, including the depositions of Cook, Duda, and Hruza. Included as exhibits in these depositions were the assignment signed by Duda, documentation of Duda's nursing home bills, the application for public assistance Cook filled out on Duda's behalf, and a list of various checks written on Duda's bank accounts documenting the $83,255.04 of Duda's funds that Cook had used for her own personal benefit. In her deposition, Cook stated that from 1990 to 1994, acting as Duda's power of attorney, she met with Duda approximately once a month to discuss Duda's finances. Cook admitted to using nearly all of the $83,255.04 for her own personal use and could not account for the amounts that she had not specifically admitted to using for personal use. However, Cook claimed the amounts withdrawn from Duda's bank accounts and used for Cook's personal benefit were gifts made with Duda's permission. The power of attorney instrument did not specifically provide that Cook could make gifts to herself from Duda's property. Cook admitted that she had not repaid any of this money to Duda. Cook also admitted that when she applied for public assistance for Duda in 1994, Duda "was out of money, zero, at that point." When Cook was deposed on June 9, 1999, she had not seen Duda for approximately 1 year.

An affidavit from Johnson, the Manor's attorney, was also admitted into evidence. In the affidavit, Johnson stated that he prepared the assignment dated January 30, 1998. He stated that he had previously discussed the assignment with Duda on two occasions, September 19 and October 20, 1997. Johnson stated that on September 19, Duda "appeared to understand the meaning of the Assignment and the actions she was taking." However, Johnson stated that when he discussed the assignment with Duda on October 20, he informed Duda that he believed that Cook had used Duda's funds for purposes other than for Duda's benefit. Duda responded that "she didn't know anything about that." Johnson stated that when he explained the assignment to Duda on January 30, 1998, and Duda signed the assignment, Duda "appeared to understand the document and what she was doing."

In his deposition, Hruza stated that he has known Duda since she became a resident at the Manor and that he sees Duda on a regular basis. Hruza discussed Duda's nursing home bills and also testified that he was present when Duda signed the assignment on January 30, 1998. He testified that when Duda signed the assignment, she was "`upset' because of what the niece [Cook] had done to her in reference to her property." However, Hruza also stated, "I do not remember her [Duda] ever mentioning dollars, because I do not believe that she knew that she had dollars, one way or the other, whether it was ten dollars or whatever it was, it didn't make her any [sic] difference."

Evidence regarding Duda's mental condition was also admitted at the hearing. The Manor's psychological records on Duda, dating from 1994 to 1998, indicated that Duda's concentration, memory, place and time orientation, and self-care functioning were impaired to some degree, ranging from mild to severe impairment. Also admitted into evidence was a request the Manor submitted to the Social Security Administration on June 21, 1994, requesting that the Supplemental Security Income benefits that Duda was receiving be paid to the Manor as representative payee. This request stated that Duda "needs a payee because she cannot understand the value of money."

Duda's deposition was taken on June 16, 1999. During the deposition, Duda, who was 99 years old at the time, stated that she was 93 years old. She stated that she knew "Cheryll Weber" was her relative, but did not know how she and Weber (Cook) were related. Duda believed that "Cheryll Weber" and "Cheryll Cook" were two different people. When asked if she had appointed Cook as her power of attorney, Duda stated, "I don't know anything about that." When shown a copy of the power of attorney, Duda did not know what it was. Duda stated that Cook did not pay any bills for Duda or write any checks for Duda and that Duda did not have any bills. When shown a copy of the assignment, Duda did not know what it was. When asked if her signature appeared on the assignment, Duda responded, "I don't remember. I don't know. Don't bother me any more."

On November 8, 1999, the district court denied the Manor's motion for partial summary judgment and granted Cook's motion for summary judgment. The district court determined that as a matter of law, Duda's claim against Cook was not assignable, extending our holding in Earth Science Labs. v. Adkins & Wondra, P.C., 246 Neb. 798, 523 N.W.2d 254 (1994), in which we determined that attorney malpractice claims are not assignable due to the highly personal and confidential relationship between attorney and client.

The district court relied on a combination of three cases, Earth Science Labs., supra; Community First State Bank v. Olsen, 255 Neb. 617, 587 N.W.2d 364 (1998); and Olsen v. Richards, 232 Neb. 298, 440 N.W.2d 463 (1989), in determining that the assignment was void. The district court first determined that under Earth Science Labs., the "critical element" in determining whether a claim is assignable is whether the claim involves a "highly personal and confidential relationship." The district court then determined that there was no genuine issue of material fact that the relationship between Cook and Duda was highly personal and confidential. The court next determined that, essentially, this action was an action for breach of fiduciary duties. The district court, citing Community First State Bank, supra,

and Olsen, supra, then stated, "The Nebraska Supreme Court has ruled that where an action is one for breach of fiduciary duty, the cause of action is not assignable." Based on these cases, the district court sustained Cook's motion for summary judgment, determining that Duda's claim against Cook was not assignable as a matter of law and that the assignment was void as against public policy. The Manor appeals.

ASSIGNMENTS OF ERROR

The Manor claims, summarized and rephrased, that the district court erred in (1) finding the assignment void as a matter of law and granting summary judgment to Cook on that basis, (2) finding that the relationship between Cook and Duda was "highly personal and confidential," and (3) denying the...