Trial Set For July 7-10 On Donald Sterling's Mental Incapacity
There will be a trial between Donald Sterling and his estranged wife Shelly to determine whether she has the authority to sell the Los Angeles Clippers without his consent. At a hearing earlier today, California Superior Court Judge Michael Levanas ordered that a trial be held from July 7 - 10 to determine whether Donald Sterling was deemed to suffer from "mental incapacity." The finding of mental incapacity triggered Donald's removal as co-Trustee of the Sterling Family Trust, which formally owns the Clippers, leaving Shelly as the sole Trustee. As sole Trustee, Shelly Sterling entered into a binding agreement to sell the Clippers to former Microsoft CEO Steve Ballmer for $2 billion.
As I will explain in detail below the fold, if Judge Levanas decides that Donald Sterling was not properly deemed mentally incapacitated, the deal to sell the Clippers to Ballmer will blow up. Instead, the NBA will resume the process to terminate the Sterlings' ownership of the Clippers and seize the team. At the same time, Donald Sterling will proceed with his billion dollar lawsuit against the NBA seeking to rescind his punishment and regain control of the team. Under those circumstances, the NBA would own and operate the team until the litigation and all appeals concluded. That process would certainly take months and possibly years.
The Provisions Of The Sterling Family Trust Require Removal Upon A Finding Of Mental Incapacity
Under the terms of the Sterling Family Trust, "Any person who is deemed incapacitated . . . shall cease to serve as a Trustee of all trusts under this document." Donald Sterling was required to sit for the mental examination requested by Shelly because he agreed in the Trust document to "cooperate in an examination reasonably appropriate" to determine capacity. The Trust defined "incapacity" to mean "incapable of managing an individual's affairs under the criteria set forth in California Probate Code Section 810 et seq."
Under Section 810, there is a "rebuttable presumption" that a person has capacity. Section 811 of the law sets forth 4 criteria, with 14 sub criteria, to measure incapacity.
(1) Alertness and attention, including, but not limited to, the following: (A) Level of arousal or consciousness. (B) Orientation to time, place, person, and situation. (C) Ability to attend and concentrate. (2) Information processing, including, but not limited to, the following: (A) Short- and long-term memory, including immediate recall. (B) Ability to understand or communicate with others, either verbally or otherwise. (C) Recognition of familiar objects and familiar persons. (D) Ability to understand and appreciate quantities. (E) Ability to reason using abstract concepts. (F) Ability to plan, organize, and carry out actions in one's own rational self-interest. (G) Ability to reason logically.
(3) Thought processes. Deficits in these functions may be demonstrated by the presence of the following: (A) Severely disorganized thinking. (B) Hallucinations. (C) Delusions. (D) Uncontrollable, repetitive, or intrusive thoughts.
(4) Ability to modulate mood and affect. Deficits in this ability may be demonstrated by the presence of a pervasive and persistent or recurrent state of euphoria, anger, anxiety, fear, panic, depression, hopelessness or despair, helplessness, apathy or indifference, that is inappropriate in degree to the individual's circumstances.
In order for there to be a finding of incapacity, the must be a finding that one of the deficits listed above exists but also that the deficit(s) "significantly impairs the person's ability to understand and appreciate the consequences of his or her actions with regard to the type of act or decision in question."
The Sterling Family Trust provides that a person shall be deemed incapacitated if "two licensed physicians who, as a regular part of their practice are called upon to measure the capacity of others . . . examine the individual and certify in writing that the individual is incapacitated."
Leading Physicians Examined Donald Sterling And Certified That He Was Mentally Incapacitated
Donald Sterling was examined by two leading physicians in late May 2014 and both found him to be mentally incapacitated. Neither of these doctors was Donald Sterling's regular treating physician.
First, Dr. Meril Sue Platzer, a neurologist specializing the treatment of Alzheimer's Dementia, examined Donald Sterling on May 19. She administered the routine MiniMental Status Examination (23/29) and found that he was disoriented as to season. She found a significant deficit in short term memory in that he recalled only two (out of five) objects after three minutes. She found Sterling could not perform rudimentary mental dexterity tests, such as counting backwards by 7s from 100 or spelling the word "WORLD" backwards. She also noted atrophy of Donald Sterling's brain in a PET scan and CT scan.
On the basis of her examination, Dr. Platzer certified that Donald Sterling "is unable to reasonably carry out the duties as Trustee of the Sterling Family Trust." She specifically based this finding upon subsidiary findings of "an impairment of his level of attention, information processing, short term memory impairment and ability to modulate mood, emotional lability and is at risk of making potentially serious errors in judgment."
Three days later, on May 22, Dr. J. Edward Spar - a UCLA Professor of Psychiatry in the Geriatric Division - examined Donald Sterling and also found him to be mentally incapacitated. Dr. Spar's two page report provides a detailed account of his examination of Donald Sterling. Sterling scored a 24/29 when Dr. Spar administered the MMSE. Dr. Spar concluded, "Mr. Sterling is at risk of making potentially serious errors of judgment, impulse control and recall in the management of his finances and his trust. . . .In my opinion he is substantially unable to manage his finances and resist fraud and undue influence, and is no longer competent to act as trustee of his trust."
Shelly Sterling had a third physician - Dr. Stephen Read (another geriatric psychiatrist) - provide an opinion on Donald Sterling's incapacity. Dr. Read did not examine Donald Sterling. Instead, Dr. Read reviewed the reports of Dr. Platzer and Dr. Spar and concluded that those statements "document solid grounds for the determination that Mr. Donald T. Sterling lacks the capacity to function as Trustee for the Sterling Family Trust."
Judge Levanas Set A Trial Rather Than Accept The Incapacity Determinations On Their Face
Shelly Sterling's attorneys argued to Judge Levanas that the terms of the Sterling Family Trust were satisfied by the physician certifications they submitted. The Court, however, decided to hold an evidentiary hearing. At that hearing, each side will have the opportunity to present witnesses. Presumably, Shelly Sterling will present each of the three doctors who submitted declarations.
Donald Sterling's attorneys will have several potentially crucial witnesses. The first, obviously, is Donald Sterling. If he is able to take the stand and testify lucidly under direct and cross-examination, that would likely count strongly in his favor. The second set of potentially crucial witnesses are Donald Sterlings's treating physicians. In my experience litigating high-stakes capacity issues, a judge is more likely to be persuaded by a physician who "treats a patient" over a long period of time than a "hired gun" who merely "evaluates a subject" on a single occasion. If Donald Sterling's treating physicians do not testify as to his mental capacity, that likely will strongly influence the judge's decision.
The $2 Billion Sale To Ballmer Will Likely Disappear Unless Judge Levanas Finds Donald Sterling Incapacitated
The deadline for closing Steve Ballmer's $2 billion purchase of the Clippers is September 15, 2014. Under the settlement agreement that Shelly Sterling reached with the NBA, if the transaction has not closed by September 15, 2014, the NBA can resume its termination proceedings against the Sterlings and seize control of the team. Ballmer has not obligation to close the deal until Shelly Sterling has not obtained a final, non-appealable court ruling that she is the sole Trustee of the Sterling Family Trust. Obviously, if the Court holds that Donald Sterling is not mentally incapacitated, Shelly Sterling would not be the sole Trustee and Donald Sterling would have the ability to prevent the sale of the team.