Ex parte Bashinsky

319 So.3d 1240

EX PARTE Joann BASHINSKY

(In re: In the matter of the Estate of Joann Bashinsky, a protected person)

1190193

Supreme Court of Alabama.

July 2, 2020

Rehearing Denied August 21, 2020

Susan Walker, Birmingham, for petitioner.

Marc James Ayers, Ralph H. Yeilding, and Jeffrey D. Dyess of Bradley Arant Boult Cummings LLP, Birmingham; and Burton Dunn of Five Points Law Group, LLC, Birmingham, for respondents John P. McKleroy, Jr., and Patricia R. Townsend.

French A. McMillan, asst. county atty., Jefferson County Attorney's Office, Birmingham, for respondent Judge Alan King.

MENDHEIM, Justice.

Joann Bashinsky petitions this Court for a writ of mandamus directing the Jefferson Probate Court to vacate its orders disqualifying her attorneys from representing her in the underlying proceedings and appointing a temporary guardian and conservator over her person and property. Bashinsky also seeks dismissal of the "Emergency Petition for a Temporary Guardian and Conservator" ("the emergency petition") that initiated the underlying proceedings and the petition for a permanent guardian and conservator ("the permanent petition") filed simultaneously with the emergency petition in the probate court, both of which were filed by John McKleroy and Patty Townsend. We grant the petition in part, deny it in part, and issue the writ.

I. Facts

Joann Bashinsky ("Ms. Bashinsky") is the widow of Sloan Y. Bashinsky, Sr. ("Mr. Bashinsky"), who owned the majority stock in Golden Enterprises, Inc., and who was the founder, chairman, and chief executive officer of Golden Flake Foods ("Golden Flake"). At the time of the events that precipitated this petition, Ms. Bashinsky was 88 years old. Mr. Bashinsky married Ms. Bashinsky in 1968, following the death of his first wife. Mr. Bashinsky had three children by his first wife. At the time Mr. Bashinsky married Ms. Bashinsky, she had one daughter, Suzanne, by an earlier marriage. Suzanne, now deceased, was adopted by Mr. Bashinsky when he and Ms. Bashinsky married. Currently, Ms. Bashinsky's only blood relative is Suzanne's only son, Landon E. Ash.

McKleroy has had a professional relationship with Ms. Bashinsky that dates back to 1968, the year she and Mr. Bashinsky married. McKleroy acted as a personal lawyer to Mr. Bashinsky, to Ms. Bashinsky, and to the corporate entities in the family businesses, including Golden Flake, Golden Enterprises, SYB, Inc., and Bashinsky Foundation, Inc., and for related family trusts. McKleroy served on the board of Golden Enterprises from 1976 until the company merged with Utz in 2016, and he has served on the board of SYB, Inc., since its formation in 1981. On April 2, 1992, Ms. Bashinsky appointed McKleroy as the holder of her power of attorney.¹

Townsend previously served the Bashinsky family as Mr. Bashinsky's executive assistant. She was the corporate secretary, controller, and chief financial officer at Golden Enterprises, and she served as Ms. Bashinsky's personal financial assistant beginning in 2017, often having daily contact with Ms. Bashinsky. Ms. Bashinsky alleges that on October 1, 2019, she terminated Townsend's employment. The emergency petition acknowledges this assertion, stating that, "[o]n October 1, 2019, Ms. Townsend received a letter purportedly written by Ms. Bashinsky, terminating Ms. Townsend."

At the time of the events in question, Ms. Bashinsky's personal estate was estimated to be worth $80 million, and her entire estate (including trusts and business assets) was valued at $218 million. The emergency petition asserts that, beginning in 2012, Ash asked Ms. Bashinsky for loans for himself and for his various business ventures. The emergency petition, which was filed on October 1, 2019, states that the loan amounts increased over time and that Ash's total amount of indebtedness to Ms. Bashinsky at that time was approximately $23.5 million. Ash allegedly borrowed $13.4 million from Ms. Bashinsky in 2019. The emergency petition also states that in August 2019 Ms. Bashinsky hired Bise Business Advisory, LLC ("Bise"), to evaluate Ash's primary business venture, Xtreme Concepts, Inc ("XCI").² Bise recommended that Ms. Bashinsky not make any further investments in XCI because XCI had "a history of operating losses"; it has "extraordinarily poor administrative order"; and its common stock had no value. The emergency petition asserts that Ms. Bashinsky's financial transactions with Ash "are problematic in that, if the IRS were to review these loans, they might have tremendous tax consequences for Ms. Bashinsky." The emergency petition also asserts:

"Ms. Bashinsky has a Last Will and Testament in which she makes general specific bequests to charities and nonprofits that have been important to the Bashinsky family and names [Ash] as residuary beneficiary. ... The value of the loans to [Ash] have decreased Ms. Bashinsky's estate to such a level that if she were to pass away today, her executor could not fund her specific bequests in the amounts set forth in her will."³

The emergency petition states that "[b]oth Mr. McKleroy and Ms. Townsend have witnessed a decline in Ms. Bashinsky's faculties in their discussions with Ms. Bashinsky about financial matters." Attached to the emergency petition is a letter dated September 26, 2019, from Dr. Carolyn Harada, a geriatric physician at the University of Alabama at Birmingham ("UAB") Geriatrics Clinic, in which Dr. Harada states that she evaluated Ms. Bashinsky on September 19, 2019.⁴ The letter states, in part:

"I assessed [Ms. Bashinsky's] cognition and found her to have significant cognitive impairment, likely due to dementia. Her cognitive deficits on office-based testing included deficits in executive function. Based on reports from her care team, it sounds as though there is reason to question her judgment and her ability to make sound decisions about her finances."

A supplemental report filed by the guardian ad litem appointed by the probate court elaborated:

"Dr. Harada reported her staff administering the ‘Montreal Cognitive Assessment ’ test to Joann Bashinsky while in an office examination on September 19, 2019 that rendered a score of 18 out of 30. Dr. Harada reported that she spent approximately one hour with Mrs. Bashinsky during which time she showed signs of short term memory loss and some confusion. Dr. Harada stated that she recommended a MRI to determine if Joann Bashinsky had possibly suffered a CVA (stroke ) in the past that might have caused her dementia but the MRI test was cancelled by someone in Mrs. Bashinsky's inner circle of caregivers. Dr. Harada rendered her opinion that Joann Bashinsky is a ‘risk for exploitation by others due to her dementia.’ "⁵

Approximately $35 million of Ms. Bashinsky's personal assets are held in investment accounts at Level Four Advisory Services, LLC ("Level Four"). Ms. Bashinsky asserts that in 2018 she asked both McKleroy and Townsend to transfer $17.5 million from Level Four to financial advisor David Heath at the investment firm Morgan Stanley. According to Ms. Bashinsky, McKleroy and Townsend refused to carry out her request.

On September 26, 2019, Stephen Laconis, the chief financial advisor for Level Four, e-mailed McKleroy and Townsend, informing them that Ms. Bashinsky had telephoned him that day. Laconis stated that, after preliminary small talk between him and Ms. Bashinsky, Ms. Bashinsky "could not remember" why she had called him. She then asked someone who was with her why she was calling, and Laconis heard that person, who Laconis stated had a female voice, tell Ms. Bashinsky " ‘transfer [half] of her personal assets to Morgan Stanley.’ " Laconis told McKleroy and Townsend that he believed Ms. Bashinsky was being "coach[ed] .... It clearly was not her idea." Laconis wanted instructions from McKleroy and Townsend on how to proceed.

Later the same day, September 26, 2019, Ms. Bashinsky e-mailed Laconis with the following instruction: "Please send $17.5 million to Morgan Stanley c/o David Heath in order to correctly diversify and halve my personal assets." Laconis forwarded this e-mail to others at Level Four, including Jill Zacha, Level Four's chief compliance officer, with the added comment: "I do not believe this is her typing." Zacha sent Laconis a reply in which she stated, in part:

"This request has a number of glaring red flags and accordingly we should most definitely pause on acting on it until the legitimacy and circumstances surrounding the request has been fully vetted.

"More specifically, per company policy (and industry standards), you would need to confirm email instructions verbally with Mrs. [Bashinsky] anyway.

"I would also recommend involving the POA [Power of Attorney John McKleroy] particularly given the recent dementia diagnosis and given that this request is out of line with typical interactions with Mrs. [Bashinsky] and completely contrary to previous discussions with her (i.e., that she did not want any more distributions the rest of the year)."

(Emphasis added.) Laconis forwarded Zacha's response to McKleroy.

The emergency petition asserts that also on September 26, 2019, Ms. Bashinsky telephoned Townsend 19 times and that in one of those calls Ms. Bashinsky stated:

" ‘I don't know why I am calling you.’ Then Ms. Bashinsky asked a caregiver, Melanie Myers, ‘What am I supposed to tell her?’ Ms. Townsend overheard Melanie say ‘Diversify.’ Ms. Bashinsky then repeated to Ms. Townsend: ‘Diversify.’ Ms. Townsend then overheard Melanie say to ‘give David Heath half her personal investment.’ Ms. Bashinsky then said: ‘Patty, I'm sick and I wish I did not have a damn penny.’ "

The emergency petition also states that later on the same day Ash called Townsend to tell her that she should move half of Ms. Bashinsky's accounts to David Heath at Morgan Stanley. Further, the emergency petition recounts: "On Friday, September 27, Ms. Bashinsky called Ms. Townsend again. She asked whether Ms. Townsend had received an email from [Ash]. ...