No Sanctions For Guardianship Defense

The North Carolina Court of Appeals has held that sanctions were not justified against an attorney for her representation of a client in a proceeding alleging that the client was not competent to handle her own affairs.

The proceeding had been brought by the client’s brother, with whom the client apparently had a contentious relationship. The brother sought to be appointed as the client’s guardian.

Attorney Andrews could reasonably have inferred from Frank Cranor’s original and amended petitions for adjudication of Carole Cranor’s incompetence that Frank Cranor was attempting to gain control over his sister’s assets by having her declared incompetent and having himself named as her general guardian, and that the petitions were filed without a proper basis in fact. The petition was eventually dismissed for failure to state a claim. Frank Cranor represented in his petition that he had first-hand knowledge of Carole’s condition though there is evidence that he had no first-hand knowledge of her condition, in that he had had very little contact with her for many years…

we do not take a position regarding Attorney Andrews’ beliefs about the motivation of Frank Cranor and Attorney West in filing the petition or in prosecuting this matter. Indeed, Carole was suffering from dementia, and there was a concern regarding the initial DPOA which contained the self-gifting provision in favor of Ms. Hopkins. We simply conclude that the unchallenged findings and uncontroverted evidence in the record supports a conclusion that Attorney Andrews acted in good faith in filing the Rule 11 motion and the motion for attorneys’ fees. Accordingly, we hold that the superior court erred in imposing sanctions on Attorney Andrews in response to both motions.

 Nor were sanctions appropriate as an exercise of the lower court’s inherent authority

In addition to the imposition of sanctions pursuant to Rule 11, the superior court imposed sanctions against Attorney Andrews in the exercise of its inherent authority. These sanctions included (1) prohibiting Attorney Andrews from collecting any fees or expenses from Carole Cranor, and (2) removing Attorney Andrews as Carole Cranor’s attorney. The proper standard of review for acts by the trial court in the exercise of its inherent authority is abuse of discretion. In re Key, 182 N.C. App. 714, 721, 643 S.E.2d 452, 457 (2007).

The superior court prohibited Attorney Andrews from collecting fees or expenses from Carole Cranor pursuant to the provisions of Indigent Defense Services (“IDS”) Rule 1.9(e), which governs the appointment of counsel to indigent clients and also applies to guardian ad litem appointments in certain situations. This was improper and constitutes an abuse of discretion. IDS Rule 1.9(e) addresses a situation where an attorney is appointed as counsel for an indigent client, withdraws, and then becomes privately retained as counsel for the same client. See Commentary to IDS Rule 1.9(e) (2014). That situation is markedly different from the facts of this case, where Ms. Andrews was appointed as Ms. Cranor’s guardian ad litem and where the record clearly shows that Ms. Cranor was not indigent. IDS Rule 1.9(e) clearly does not apply in the present situation.

Additionally, we do not believe the record supports the trial court’s removal of Attorney Andrews as counsel for Carole Cranor in this matter, or its order preventing Carole Cranor from retaining Attorney Andrews in any future matter.6 As previously discussed, many of the findings used by the trial court to support its conclusions were not supported by the evidence in the record. We do not believe that the undisturbed findings of the trial court support this sanction.

Justice Hunter concurred and dissented in part.

First, I would hold the trial court’s conclusions of law support its imposition of sanctions; the trial court’s conclusions of law are supported by its findings of fact; and the findings of fact are supported by a sufficiency of the evidence. Therefore, the trial court’s “decision to impose” Rule 11 sanctions is binding on this court. Turner, 352 N.C. at 165, 381 S.E.2d at 714.

Second, I would hold the trial court did not abuse its discretion in selecting the specific sanctions at issue. The trial court assigned the excess cost of litigation to Appellant, and prevented her from further representation in a case that she originally claimed presented a conflict of interest. Further, the trial court referred the matter to the State Bar, and in doing so, it did not abuse its discretion.

(Mike Frisch)