Attorney Must Return Millions From Estate : Courts: Judge tells former probate lawyer to repay $3.5 million plus interest to heirs of Leisure World man.
In a case that attorneys described as without precedent in California, an Orange County Superior Court judge on Friday ordered former probate lawyer James D. Gunderson to return $3.5 million he received from the estate of a 98-year-old Leisure World man.
In a brief written decision, Judge Byron K. McMillan said Gunderson should repay the money, plus $500,000 in interest, to heirs of Merrill A. Miller, who died in February, 1992, leaving an $18-million estate.
Two days after Miller’s death, Gunderson began paying himself his one-fifth share of the estate, as he began selling Miller’s substantial holdings of Abbott Laboratories stock.
On Friday evening, Gunderson’s lawyer, Stuart Lesansky, said he was disappointed with the court’s ruling. He said he plans to request a statement of decision--a written explanation of the judge’s ruling--before deciding his next action.
Gunderson’s inheritances from the Miller estate, and from those of several of his other elderly clients, were brought to light in a series of articles published by The Times in late 1992.
The articles prompted the state Legislature in 1993 to pass a new law, pushed by Assemblymen Tom Umberg (D-Garden Grove) and Bill Morrow (R-Oceanside), that invalidated most bequests to attorneys who prepare wills and trusts naming themselves as beneficiaries.
William H. Westover, a Phoenix lawyer representing eight heirs who contested the bequest to Gunderson, said he was delighted by the judge’s decision.
“This will serve as a warning to all those lawyers, fiduciaries and people in positions (of confidence) that if they abuse their trust, they will pay for it,” Westover said.
“There are a substantial number of published cases about attorneys who have, while acting as an attorney for a client, prepared a will in which the attorney was named as a beneficiary,” Westover also said in court papers filed last week. “In this particular instance, the ingenuity of James Gunderson, in devising other means by which he could profit from his clients’ estates, has no precedent.”
In his handling of Miller’s estate, Gunderson arranged for a former law partner to serve as the attorney of record when the final version of Miller’s will and some trust documents were presented to the blind and bedridden 98-year-old man only six weeks before his death.
Gunderson, 69, has vigorously denied any wrongdoing.
During the civil trial, Gunderson testified that Miller was his best friend and fishing buddy. Miller, he said, wanted him to have the lion’s share of his estate.
*
In his Friday ruling, the judge sided with the heirs whose attorneys claimed that Miller’s gift to Gunderson followed a disquieting pattern in which the probate lawyer received inheritances from the estates of several other clients.
The inheritances appeared to conflict with a long-standing California Supreme Court ruling that anything more than a “modest” gift to an attorney preparing a will raised questions of impropriety. The justices in that landmark case decided that a $20,000 bequest was excessive, and ordered that inheritance returned.
The verdict against Gunderson is the latest in a series of actions triggered by the November, 1992, Times articles detailing how Gunderson inherited millions of dollars in cash, stock, and real estate from clients whose wills and trusts had been prepared either by him or other members of his law firm.
Immediately after the Times articles appeared, the State Bar of California announced that it would conduct an investigation into Gunderson’s legal practice. Gunderson surrendered his license to practice law in California in January, after State Bar prosecutors announced that they were prepared to file conflict-of-interest charges that could have led to his possible disbarment. Gunderson said he resigned because of his failing health.
The inheritances described in the Times story are still being investigated by the Orange County Sheriff’s Department, which monitored the civil trial.
The Times articles also disclosed that Gunderson had secured title to a square mile of land in San Bernardino County and a 316-acre Fresno ranch from the estates of two other clients.
In yet another case, Gunderson inherited nearly $250,000 in AT&T; stock from a Canadian woman who had been declared senile five months before Gunderson prepared her last will and testament, making himself the estate’s major beneficiary.
Other heirs in that case sued Gunderson and later agreed to drop the suit in exchange for a $60,000 out-of-court settlement to be paid by Gunderson. Gunderson said he settled to save himself the litigation costs, and an attorney for the Canadian woman’s heirs said they accepted less than the full $250,000 because of the high costs of going to court in another country.
During the trial involving Miller’s estate, the judge permitted the heirs’ attorneys to introduce evidence about Gunderson’s other inheritances.
Apart from raising questions about the inheritances mentioned in The Times’ articles, the attorneys said they found several other cases in which Gunderson was a named beneficiary of clients’ estates.
In one previously unreported case, Gunderson awarded himself the remainder of the estate of Mary Hall after her death. He testified that the woman wanted him to inherit all her belongings.
In another case, the heirs’ attorneys accused Gunderson in court papers of a “surreptitious theft” involving a painting by Charles Russell, a noted painter of Native Americans and their landscape.
The attorneys claimed that Gunderson paid the estate $16,000 for the painting, then gave it to his secretary’s husband who resold it at a $71,000 profit, which both men shared. Gunderson denied the allegation, saying his secretary’s husband alone reaped the profit.
“The machinations uncovered by these proceedings, of which the foregoing . . . are only a fraction, suggests strongly we have learned only the tip of the iceberg,” the heirs’ attorneys contended in court papers. They noted that Gunderson had handled the estates of an estimated 8,000 clients, and “the opportunities would have presented themselves on multiple occasions were he willing to breach his fiduciary responsibilities.”
Lesansky, Gunderson’s lawyer, disputed such claims. He said in court papers filed this week that there were only “a handful of instances where Mr. Gunderson was remembered by friends.
“Mr. Gunderson served his clients in an extraordinary (and yet simple) fashion, much like the country doctor, making house calls, passing time with his clients, giving a reassuring pat on the back, a kind word, and most of all, lending a compassionate ear.”
The heirs’ attorneys will most likely have to wage another legal battle to recover the $4 million. Gunderson testified during trial that he had transferred a portion of the inheritance to a trust controlled by his children, and converted the remainder to into cash for himself. The judge said Linda Gunderson, his daughter and former law partner, was liable for $743,888 of the $4-million judgment, accepting the heirs’ argument that her father transferred some Abbott stock from Miller’s estate into her account.
Westover--who with his father, John H. Westover of Phoenix, and his cousin, Harry Westover of Corona del Mar, represented the heirs--said he was delighted that the judge had vindicated the heirs’ decision to challenge Gunderson.
In papers filed last week, the Westovers made an impassioned plea for the judge to “send a message to the public that the profession and the system (do) not condone the greedy, selfish conduct of attorneys who misuse the . . . trust vested in them.”
“We now know that by abusing the secrecy which the system has afforded to his clients, Mr. Gunderson and his family have profited by untold sums at the expense of estates of those whom he purported to protect,” the Westovers said. “His conduct is also at the expense of those members of the profession who do not want to be known as greedy, conniving shysters.”
