The mishandling of a Douglas County woman's estate could end up costing a stockbroker and financial corporation handling her estate more than $10 million.
The Nevada Supreme Court on Friday voted to restore and increase the judgment against Dean Witter Reynolds financial corporation and stockbroker Warren House for mishandling the estate of a Douglas County woman.
Elfreda Gardner was worth an estimated $8 million when her husband Allen died in 1985. But by the time she died in 1993 , the value of that estate was cut to less than half that amount.
Administrator Michael Evans sued on behalf of the estate and her heirs. He charged, among other things, that her deceased husband's nephew Jack Gardner had improperly squandered and converted millions worth of Elfreda's assets. Dean Witter and House were drawn into the suit because the company, through House, allowed Gardner to remove and write checks on those assets even after her death.
There was testimony at trial that her mental condition while a nursing home patient was so poor that she lacked the capacity to understand documents she was signing that gave Dean Witter and Gardner the power to manipulate her assets.
There were transfers of millions in assets to Gardner's control both before and after the woman's death.
"These transactions substantially depleted the portion of the estate gifted in Elfreda's will to the Stiegler heirs (her nieces and nephews)," the court's opinion states.
"Dean Witter allowed these transfers despite its policy of freezing accounts upon the death of a client," it says, adding that some of the signatures were forged by Gardner and there is some suggestion House knew that at the time.
The trial jury awarded the estate $2.6 million in compensatory damages, $6 million in punitive damages against Dean Witter and $50,000 in punitive damages against House as the broker.
The district court later eliminated those compensatory damages, saying the amount was offset by the value of property returned by the Gardner estate after Jack died. By law, that eliminated the punitive damages as well, because Nevada law limits punitive awards to three times the compensatory award and, if that amount is zero, no punitive damages may be awarded.
The high court disagreed, not only restoring the compensatory award but advising District Judge Mike Griffin that the amount should be set at the actual $4.1 million the estate lost during that period. The court, in a unanimous decision, reinstated the $6 million and $50,000 in punitive damages.