A Power of Attorney Gone Wrong (Part 2)

Last week we were discussing John Potter’s plight.  He executed a power of attorney in favor of his daughter and she transferred the home to herself, without his knowledge, even though the document didn’t give her the power to do so.  Then, why didn’t he get his house back?

The news reports of the case state that Potter lost his case because the appeals court said he filed his complaint after the 4 year statute of limitations ran out.  He signed the POA in 2004 and discovered the deed transfer in 2010.  It’s not clear from the new stories when the deed transfer occurred or when he filed his lawsuit.   A couple of questions come to mind.

In New Jersey the statute of limitations to file an action for fraud is 6 years, so perhaps Potter would have had a better result here.  But, there is also something known as the discovery rule which has been carved out over time by New Jersey courts.  It says that if the injured party didn’t know or have the ability thru due diligence to discover the harm, then the time limit under the statute is “tolled”.  This might have given John Potter time to file his claim.

There also is a New Jersey law that permits the statute to be tolled if the injured party is insane.  If Potter was suffering from dementia, for example, to the extent that he did not know about the transfer, he might have an argument that the statute should be tolled, which would get him the additional time to file his claim.

The outcome seems so obviously unfair, given that Potter’s daughter,  Janice Cottrill so blatantly violated the terms of the power of attorney, that it’s hard to understand why Cottrill should “get away with it”.  But the law can be harsh and a rule is a rule.

The case highlights both the pros and cons of this very simple document which can be so dangerous if put in the wrong hands.  The law allows for an easy method that everyone can avail themselves of, to put a plan in place to designate another to act as their surrogate decision maker.  That’s a good thing.  Otherwise we all would have to go thru a time consuming and expensive process called guardianship.  The court system would be overburdened and the outcome wouldn’t always be satisfactory, anyway.

But occasionally, when that power is put in the wrong hands, as John Potter did when designating his daughter as his agent, something can go horribly wrong.  It is not clear whether there were any signs well before 2010 that Cottrill wasn’t acting in her dad’s best interest.  Often the signs are there if someone is paying attention.   The lesson learned is that if something doesn’t seem right, families need to investigate and address it as soon as possible.

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