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High-dollar ‘malpractice’ case unsealed by court order

Copyright © 2017 Albuquerque Journal

Annette Rosenstiel and daughter Leonie Rosenstiel prior to Annette’s death in 2012.

For nearly three years, Leonie Rosenstiel was barred from seeing her own mother by the professional guardian/conservator who was appointed after Rosenstiel realized her 92-year-old mother’s dementia was worsening and went to court for help.

Before she initiated the legal action in 2003 that ended up with Decades LLC being put in charge of Annette Rosenstiel’s care and finances, Leonie says she had seen her mother at least several times a week.

But months into the guardianship, Leonie – who had initially asked to be her mother’s guardian and conservator – alleges she was suddenly told her presence would be harmful to her mother and that her mother didn’t want to see her. She was banned.

When Leonie was allowed to see her mother again in mid-2007, Annette Rosenstiel, by that time 96, told her she thought Leonie had moved away, because she had been absent for so long.

Those are some of the claims, along with allegations that her mother’s financial empire crumbled due to mismanagement, in a lawsuit filed by Leonie Rosenstiel in 2013 against Decades LLC describing the nine years Annette Rosenfield was a “protected person” under the guardianship/conservator system in New Mexico.

Annette Rosenstiel died in 2012 at the age of 100. Leoine is her only child.

Allegations in the lawsuit – isolation of family members, mismanagement of assets, runaway guardianship costs – echo the kind of complaints from families – in New Mexico and elsewhere – who have called for reform of court systems designed to protect adults deemed mentally incapacitated.

The lawsuit lays out what it describes as “astonishing” expenses, ranging from legal fees to landscaping. Even now, the law firms representing Decades seek to have their bills paid from what’s left of the estate – of which Leonie Rosenstiel is personal representative and sole heir.

Privacy rights

The allegations in the case have, until now, been hidden from public view at the urging of lawyers for Decades, who have argued that sealing was essential to protect Annette Rosenstiel’s privacy rights.

While statute makes court records in guardian/conservator cases confidential, civil lawsuits like Leonie Rosenstiel’s, which alleges Decades overspent and improperly failed to diversify her mother’s assets until it was too late to prevent huge losses, are typically public.

After the Journal intervened in the case, state District Judge Alan Malott of Albuquerque on July 10 rescinded his earlier sealing order.

Malott, who had rejected a previous attempt by Leonie Rosenstiel to unseal her own case, ruled that as the personal representative who is authorized to act on behalf of her mother’s estate, Leonie Rosenstiel had the right to waive confidentiality in the case.

“Such confidentiality provisions primarily, if not solely, are designed to protect the dignity and privacy of a protected person, and to protect them from exploitation by others,” Malott wrote.

Even though New Mexico law doesn’t specifically provide for such waiver, Malott wrote, “it is axiomatic the rights we cherish as citizens of the United States and State of New Mexico may be waived if done so knowingly and without duress or coercion …”

Malott described the lawsuit as “essentially a professional malpractice case,” but said he believed sealing would still be justified absent Leonie Rosenstiel’s waiver.

Big dollars

Rosenstiel’s case is also unusual because of the huge sums of money involved.

Decades is alleged to have racked up “astonishing expenses” in caring for Rosenstiel at her home and mismanaging her assets, watching “passively as Annette’s net worth fell by millions of dollars,” Rosenstiel’s lawsuit claims.

Decades denies the allegations, saying its flexibility to adjust investments was limited by an earlier court order and that the losses were due to unforeseeable vagaries of the market.

A financial expert hired by Leonie Rosenstiel’s attorney in one court filing said the estate was at one time worth more than $12 million.

But Annette’s care and asset management cost more than $3.7 million over the nine-year period, the lawsuit states, while losses to her estate were estimated by one of Rosenstiel’s CPA experts to be in the millions of dollars.

In a single year, Decades reported disbursements of about $666,476, including legal billing of $249,832, and landscaping costs of $45,179 – expenses deducted from Annette Rosenstiel’s assets.

Two years later, the lawsuit alleges, Decades spent $480,454 in home health-care expenditures, more landscaping at $17,775 and $2,252 for “fish care.”

Annual disbursements varied from a low of $156,588 to more than $660,000 for 2008 and 2009. In 2008, Annette broke her hip and used a wheelchair until her death.

Decades, with two teams of attorneys, has fought back. The company contends the lawsuit is without merit and that Rosenstiel’s financial losses were beyond its control.

Gregory MacKenzie, an attorney for Decades, asked Malott to keep the court filings secret at a hearing in early July, but said his client wasn’t concerned about “public scrutiny.”

He told Malott that evidence in the case, set for a jury trial in late October, would vindicate Decades as acting prudently and within the standard of care.

The company in its response to the lawsuit said its responsibility was to “administer the conservatorship for Annette Rosenstiel’s benefit, which entailed honoring her express wishes that she be allowed to live in her home for as long as” medically and financially possible and paying expensive home health care costs “to ensure this objective could be reached.”

As for allegations of asset mismanagement, the company said things were fine and income strong up until 2007 and that diversification before then would have had negative tax consequences. When the situation changed in November 2007, Decades said it “promptly sought Court intervention and the power to diversify….”

It was Leonie Rosenstiel who, at that point, Decades alleges, sought to postpone that court hearing.

Decades in its response to the lawsuit also asked that Rosenstiel’s estate pay for its defense of the case. MacKenzie didn’t return a call seeking comment. Lewis returned a call but declined comment, citing Malott’s admonition that he didn’t want the case tried in the news media.

Didn’t want a guardian

Annette Rosenfield, published author and lecturer who held a Ph.D. in anthropology, was present during the November 2003 closed guardianship hearing in which her fate was determined.

According to a partial transcript of that hearing, filed as part of the malpractice case against Decades, attorney Charles Reynolds was representing Annette Rosenstiel.

“She does not want to leave her home,” he told the court. “She wants to preserve her right to autonomy, her right to express herself.”

He told the court that Annette had written three books, one of them 700 pages, and that she had a close relationship with pueblo Indians.

Annette Rosenstiel also addressed the court and talked about the pueblo Indians.

“We visited them yesterday and they were thrilled,” she told District Judge Theresa Baca. “They walked with us. They invited us to dinner …”

At one point in the hearing, the transcript shows that Annette Rosenstiel’s court-appointed guardian ad litem, Albuquerque attorney Michael Cadigan, told the judge, “What she wants me to tell you is that she loves her daughter, but there’s been friction in the management of assets. Annette recognizes she needs a conservator … someone to help her with her finances. Someone other than her daughter, just an independent fiduciary …”

As for a guardian, Reynolds relayed to the court, “she doesn’t want a guardian at all,” but that if the court appoints one she prefers it be a professional guardian and someone other than her daughter.

Family fortune

Leonie Rosenstiel’s lawsuit said her father, Raymond Rosenstiel, a graduate of the American Institute of Banking, had a number of business interests and held a seat on the New York Mercantile Exchange. He died in 1994.

Leonie and her now-deceased husband, Arthur Orrmont, moved with her mother to New Mexico from New York state in 1997.

“I was able to build it on my own with my husband,” Annette Rosenstiel testified at her own guardianship hearing. “Because I wouldn’t want for anything in the world to disturb the structure of the financial empire, if you want to put it this way, that we were able to maintain in the many years of our marriage.”

Leonie Rosenstiel originally asked to be appointed her mother’s guardian and conservator, even though her own husband was ill and needed care.

Leonie’s lawsuit contends that her mother had been increasingly influenced by a full-time health care aide, who was inappropriately inquiring about her mother’s financial affairs and mentioning an inheritance.

Decades’ principal Nancy Oriola, whose company was eventually appointed guardian and conservator, was first appointed by Judge Baca to be the court visitor – the person who gives a judge a recommendation on whether a guardianship/conservatorship is needed.

Leonie Rosenstiel says she paid Oriola $30,000.

The November 2003 hearing resulted in Decades being appointed conservator, on the recommendation of Reynolds, and limited guardian in charge of day-to-day medical decisions. Leonie was limited guardian for end-of-life and emergency medical treatment.

Friction developed early on between Leonie and Decades, the lawsuit states, and within four months Leonie contends she was barred from seeing her mother.

Even when allowed to resume visits three years later, the visits had to be cleared in advance and were monitored by a caregiver so that certain topics – like suing Decades – were not brought up.

Leonie Rosenstiel’s lawsuit alleges that isolating wards from their families removes “one source of oversight” of the guardian’s activities and makes the incapacitated person even more dependent upon the guardian and conservator.’

Decades’ duties

The primary focus of the negligence claims is on Decades’ duties managing Annette’s assets – primarily associated with the NYMEX trading seat that was valued by Decades in its first annual report in 2005 at $1.3 million, nearly half of the value of all her assets at the time, of $2.9 million.

The rental value of the seat fell from $143,750 in 2003 to $8,800 per annum in 2012.

In March 2006, Annette Rosenstiel’s single share of NYMEX holding stock was replaced with 90,000 shares when NYMEX went from a private company to a publicly traded one. That created, for a time, a huge financial boost to the estate. But the good fortune didn’t last long.

“As Annette had a dangerously concentrated position in that stock, her net worth plunged as a result in the decline of the NMX stock and trading right values,” the lawsuit states. Had her holding been properly hedged, her losses would have been limited. “Likewise, had Annette’s investments been diversified, she would not have been exposed to the heavy losses she suffered after March 2006.

Leonie Rosenstiel in her lawsuit contends she expressed her concerns to Decades about the small amount of income being generated by these assets, relative to the huge amounts being spent for her mother’s care. She contends Decades ignored her concerns and watched passively as her mother’s net worth fell by millions of dollars.

Decades in court documents contends it was bound by a judge’s earlier appointing it as conservator – an order the company says required court approval before Decades could restructure the basic configuration of Annette’s finances.

Leonie Rosenstiel contends in her lawsuit that Decades negligently delayed requesting such approval for an extended period of time and addressed it only after Leonie Rosenstiel brought the matter to the attention of the district court.

The court ultimately allowed the changes in the investments, but the diversification “took many months, although during approximately this same period Decades found time to spend some $43,000 on landscaping,” the lawsuit states.

Decades countered in its response, “The complaint seems to suggest that Decades owned a crystal ball. Decades could not possibly be expected to know when the NYMEX stock would achieve its market high as implied by the Complaint. Decades could not possibly be expected to predict the general market crash of 2008. Decades is not responsible for the decrease in the value of the stock which occurred as a result.”

Decades contends its approach was “deliberate and well-considered. As a matter of law, there was no duty to seek modification of the 2003 order before it did,” stated a motion for partial summary judgment.

In its answer, Decades denied most of the allegations, and stated that other claims were groundless.

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